Monday, March 7, 2016
One unexpected effect of the 2016 US Presidential race is its impact on the gold price.
Analysts believe the good showing so far by businessman Donald Trump as he vies for the Republican nomination is likely to worry investors, and send them scuttling for gold as a safe haven investment.
There are also concerns that a Trump victory could lead to a reduction in the value of the US dollar. Traditionally, the gold price increases as the dollar weakens.
David Govett from London commodities broker Marex Spectron told the Wall Street Journal: “The mere thought [of President Trump] would suggest a good opportunity to buy gold. Who knows what could happen should he be handed the keys to the White House.”
It isn’t just the political uncertainty in the US that has helped the gold rally this year. The precious metal’s value has been helped by a number of factors according to Mining.com.
It noted the volatile geopolitical situation around the globe, including Europe the Middle East. Part of this is the upcoming poll on European Union membership in the UK, and what Brexit could potentially mean for the EU as a whole.
In addition, financial factors are also boosting gold’s popularity with investors. There are ongoing concerns about the economic outlook and the longer-term effects of a slump in oil prices. Plus, the fall in the value of stock markets amid concerns about Chinese growth have also played a part in reviving the precious metal’s attraction.
The dollar has recently been enjoying high values, but some analysts believe this period is coming to an end. Of course, the race for the White House will play a part in the currency’s value too.
Market Oracle said: “Uncertainty regarding the US Presidential election will likely aid gold. But gold’s outlook is bright whether Donald Trump, Hillary Clinton or the Messiah himself or herself becomes President.”