Last week, Donald Trump won the GOP presidential nomination. What does it imply for the gold market?
One week ago, Donald Trump officially became the Republican Party’s presidential nominee, after he took 1,237 delegates. It did not shake the gold market, as the nomination was widely expected. However, it is generally positive news for the price of the yellow metal, as it brought Trump a step closer toward the presidency. Actually, he got a significant post-convention boost and according to some polls he even came out ahead of Clinton in the race for the White House! Indeed, the RealClear Politics showed yesterday that 44.1 percent of voters are in favor of Donald Trump, 0.2 percentage points more than in favor of Hillary Clinton. But the most important thing is that the odds of Trump’s victory are in a clear upward trend since June, increasing from 38.3 percent over the last 30 days.
The increased chance of Trump’s presidency should be a good thing for the gold market in the long-term, although the yellow metal did not get a boost on Trump’s nomination. Some analysts believe that “the uncertainty from a Trump presidency could be enough to push gold prices over $500 higher”. We are not so optimistic, but we agree that a Trump-run America would support the price of gold. We do not know for sure whether his policy would weaken the U.S. economy (mainly because he hardly presented any real economic program), but Trump’s protectionist rhetoric could create significant uncertainty and spur some safe-haven demand for gold.
But the best part of the whole election is that no matter who wins, the economy and the stock market will likely be vulnerable in 2017. Therefore, the first year of the U.S. presidential election cycle should be supportive for gold.
The key takeaway is that Trump became the official GOP presidential nominee and his odds of winning the race for the White House are in an upward trend. His presidency would increase uncertainty and safe-haven bids for gold. His defeat would be worse for the gold market, but investors should remember that the first year in the U.S. presidential cycle may be tough for the stock market, which could benefit the shiny metal, no matter who 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.
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Arkadiusz Sieron
Sunshine Profits‘ Gold News Monitor and Market Overview Editor
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