Gold prices have reached unprecedented levels as U.S. voters prepare for a pivotal presidential election that could reshape economic and monetary policies. The yellow metal surged to nearly $2,800 an ounce, driven by geopolitical and economic uncertainty. Analysts suggest the fate of bullion in the coming years hinges significantly on the election outcome, with distinct scenarios emerging under potential Trump or Harris presidencies.
How Election Outcomes May Shape Gold’s Future
The Trump Case for Gold
Donald Trump’s presidency from 2017 to 2021 saw substantial gains for gold investors, with the metal appreciating by 55% over four years. This rally was driven by heightened geopolitical risks, the U.S.-China trade war, and the economic fallout from the COVID-19 pandemic. Trump’s policies, marked by tariff hikes and strict immigration controls, created inflationary pressures that buoyed safe-haven assets like gold.
Ewa Manthey, a commodity strategist at ING, emphasizes that Trump’s return could recreate similar economic conditions. “In the longer term, Trump’s proposed policies, including tariffs and stricter immigration controls, will likely be inflationary, constraining the Federal Reserve’s ability to cut interest rates,” Manthey explained. This presents a mixed outlook for gold: while a stronger dollar might exert downward pressure, heightened trade tensions would enhance gold’s appeal as a hedge against uncertainty.
Ole S. Hanson, head of commodity strategy at Saxo Bank, adds a cautionary note. He suggests that a Republican “Red Sweep” scenario could spark fears of aggressive policy shifts, potentially driving gold prices higher. “However, a split government might unwind some of these gains, potentially triggering a $100-plus correction if expectations aren’t met,” Hanson remarked.
A Democratic Presidency: Kamala Harris’s Potential Influence
A Kamala Harris presidency, on the other hand, could guide gold prices along a different trajectory. According to Manthey, Harris might pursue policies aimed at creating a more stable economic environment, with looser immigration regulations and reduced trade tensions. “Under Harris, the Federal Reserve could maintain more accommodative monetary policies, supporting gold prices,” Manthey noted. However, reduced trade conflicts might weaken gold’s safe-haven demand, posing risks to its bullish momentum.
Despite these potential differences, short-term factors remain favorable for gold. Record central bank gold purchases, escalating geopolitical tensions, and expectations of continued dollar weakness make a compelling case for the metal. Central banks added 1,037 tonnes of gold in 2023, the second-highest annual volume ever recorded, according to the World Gold Council. In a recent survey, nearly 30% of central banks indicated plans to increase gold reserves in the coming year.
“We believe gold’s positive momentum will continue,” Manthey asserted. “Declining interest rates and reserve diversification create a perfect storm for the metal.”
Market Movements: Ora Gold and Southern Palladium in Focus
Election excitement has also spurred movements in precious metals equities, particularly on the Australian Stock Exchange (ASX). Ora Gold (ASX: OAU) reported significant high-grade results from its Crown Prince project in Western Australia, igniting a rally. The latest assays included notable intercepts, such as 20 meters at 277 grams per ton, highlighting the site’s potential. CEO Alex Passmore noted plans to finalize an ore purchase agreement with Westgold Resources, aiming for production by 2025.
Southern Palladium (ASX: SPD) also made headlines by releasing a pre-feasibility study (PFS) for its Bengwenyama project in South Africa. The PFS estimates a net present value (NPV) of $1.05 billion, placing the asset in the platinum industry’s lowest cost quartile. “The results confirm the commercial viability of Bengwenyama,” Southern Palladium stated, adding plans to proceed to a definitive feasibility study by 2025.
A Mixed But Promising Horizon
As gold prices remain elevated, both election outcomes offer compelling yet contrasting cases for the precious metal. In the short term, the macroeconomic environment appears supportive, driven by dovish central banks and geopolitical instability. However, as the election dust settles, investors must brace for potential volatility and shifts in gold’s trajectory, depending on who holds the keys to the White House.
