There are only two weeks left before the U.S. presidential election. What are the current odds of both candidates and what do they mean for the gold market?

Who Won the Third Presidential Debate?

On Wednesday, there was the final debate between Donald Trump and Hillary Clinton. She won the debate, but it wasn’t a big win, as it was probably Trump’s best performance. He was disciplined, while the moderator, unlike the two previous, properly challenged both candidates. The debate should not have a significant impact on the odds, as it would have no effect on votes of most of the watchers who are already convinced (undecided were about evenly split the between candidates). However, part of the media made a big issue of Trump’s refusal to say in advance that he would accept the election results if they went against him. The buzz about it should theoretically be negative for the Republican nominee, but the polls do not show it.

Current Odds of Presidential Candidates

According to RealClear Politics, 47.9 percent of voters are in favor of Hillary Clinton, almost 6 percentage points more than in favor of Donald Trump. It’s a huge advantage. However, a day before the debate she led by more than 7 percentage points. Therefore, although experts claimed that Clinton won the debate, the change in polls suggests the opposite. Anyway, Clinton leads the race, but Trump can still win the election, if he wins a few key swing states like Florida, Ohio or North Carolina and others. For now, Trump would have a very uphill battle as Clinton leads him in most of these crucial states.

U.S. Presidential Election and Gold

The U.S. presidential election had been, until recently, only about the choice between Clinton’s status quo and more uncertainty associated with Trump. However, after the third debate, the election may be a bit more positive for precious metals. Why? Well, there are two more concerns. First, Trump’s refusal to guarantee his concession in the hypothetical event of a defeat raises the prospect of civil unrest. We do not believe that Trump will organize a rebellion or something like that, but some riots or incidents cannot be excluded. What is important here is that there is now possibility of instability even if Clinton wins. Second, and perhaps more important, there are increasing concerns that Democrats could sweep not only the Oval Office, but also the Congress. For investors, it is almost always better when the government is divided, because it limits the ability of politicians to hurt the economy. If Democrats gains full control, they may implement harmful regulations, increase taxes or simply spend too much.

Conclusions

The bottom line is that although Trump performed the best in the third debate, Clinton won it. Hence, she is still the leader of the race, but her advantage over her rival declined a bit, despite the fact that Trump earned some negative press by not committing to accepting the results of the election. Anyway, investors should have the case of Brexit in their minds and remember that final results may be much closer than the polls suggest. If the results surprise the market, the price of gold may increase, at least for a while. The impact of the U.S. presidential election on the precious metals market is often overstated, but this election is perhaps unique. Now, the risk for the gold market is not only whether Trump or Clinton wins, but also how Trump behaves if he loses, as well whether the Democrats take over the Congress after Clinton’s likely victory. Hence, we have now two more dimensions, which make the current election so interesting in the context of the precious metals market.

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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