There are only two months left before the U.S. presidential elections. What are the current odds of both candidates and what do they mean for the gold market?
As the British referendum is behind us, the most important political risk is the outcome of the U.S. presidential election. We analyze thoroughly the impact of elections on gold in the latest edition of the Market Overview – here we would like to address the current state of the race to the White House.
According to RealClear Politics, 46.2 percent of voters are in favor of Hillary Clinton, about 3 percentage points more than in favor of Donald Trump. Although this and other polls suggest that Clinton is likely to win, we should take such a suggestion with a pinch of salt. Why? First, since August 9, the momentum has shifted back to Trump. Indeed, Clinton’s approval rating has recently plunged to an all-time low. An ABC/Washington Post poll showed that 38 percent of registered voters have a favorable opinion of Clinton, while 59 percent view her unfavorably, which is very similar to Trump’s 60 percent. Actually, both Clinton and Trump are the most hated presidential candidates. It paints a somewhat sad picture of this election, in which the least disliked candidate will win.
Second, many polls does not take into account other candidates, i.e. Gary Johnson from the Libertarian Party and Jill Stein from the Green Party. When they are included, the gap between Clinton and Trump diminishes. It is a really important issue, as people who intend to vote for other candidates and undecided represent about 20 percent of voters. Will they shift to Trump or Clinton – that is the question! Third, many polls focus on the national data, but the election will be won or lost at the state level.
To be clear, we are neither in favor of Clinton nor Trump. We are just saying that Trump’s odds may be underestimated by the polls. Remember Brexit? Polling methods were completely flawed – and they still are. Surely, Clinton is still the leader of the race and her chances are better, especially that Obama’s approval rating is high, which is a very good sign for Clinton. However, final results may be much closer than the polling odds suggest. Brexit surprised the markets – and the price of gold surged. Hence, expect a similar reaction of gold prices if Trump wins.
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Disclaimer: Please note that the aim of the above analysis is to discuss the likely long-term impact of the featured phenomenon on the price of gold and this analysis does not indicate (nor does it aim to do so) whether gold is likely to move higher or lower in the short- or medium term. In order to determine the latter, many additional factors need to be considered (i.e. sentiment, chart patterns, cycles, indicators, ratios, self-similar patterns and more) and we are taking them into account (and discussing the short- and medium-term outlook) in our trading alerts.
Thank you.
Arkadiusz Sieron
Sunshine Profits‘ Gold News Monitor and Market Overview Editor
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