Trump vs. Harris Election Day Sees Gold and Silver Rally vs. Weak Dollar
Tuesday, 11/05/2024 14:51
Both GOLD and SILVER PRICES edged higher against a weaker US Dollar on Tuesday as the half of America's electorate which hasn't voted early went to the polls to choose between Democrat Kamala Harris and Republican Donald Trump as the 2025 President.
Gold rebounded $20 from an overnight spike to 1-week lows at $2725 per Troy ounce, while
silver prices rallied 60 cents from a new 2-week low of $32.26.
China and Japan's stock markets rose sharply meantime, but European equity bourses were muted ahead of the New York opening, holding close to Friday's 2.5-month low on the EuroStoxx 600 index.
"Get used to not an election day but an election week," says metals strategist Nicky Shiels at Swiss bullion refining and finance group MKS Pamp, warning that the result will likely be slow if not delayed and contested, and also noting the 'risk event' of Thursday's US Federal Reserve decision on Dollar interest rates.
"How they effect markets is still unclear [but on last Friday's weak]
NFP jobs report, gold didn’t rally nearly as much as it could have and US stocks and bonds also rose."
Over the past 14 presidential terms since Richard Nixon took office in January 1969, gold has averaged a real annual increase of 4.4% and silver 2.1% in total.
Republican administrations saw those numbers read 3.7% and -0.9% on average. Democrat Presidents oversaw average gold gains of 5.3% per year and 6.1% in silver.
But across the 21st Century to date, that drops to 3.4% annualized real gold gains under Democrats Barack Obama and Joe Biden with silver rising 3.9%, while GOP Presidents George W.Bush and Donald Trump saw gold rise 12.2% faster than inflation and silver gain 9.4% in real terms per year on average.
What is there's a "Republican Sweep of the White House and Congress"? asks bullion-market analyst Rhona O'Connell at brokerage StoneX, comparing the longer-term outcomes of today's Election 2024.
"Gold higher in the medium term due to potential inflationary policies (corporation tax cuts, tariffs), heightened geopolitical tension.
"Democrats Sweep: also gold likely higher on fears of inflationary forces (tax and spend), but probably more pragmatism on foreign policy."
"The market is prepared and pricing in a Red Sweep," says Shiels at MKS, "but a divided government is the preferred way to moderate the extremes of either candidate.
"[However,] a race down to the margin also risks days of recounts, challenges and higher risk of public disorder."
A "contested victory" would mean "uncertainty extends," agrees O'Connell at StoneX, with "gold likely to challenge $2800 again and probably succeed.
"Clear victory" for either former President Trump or current Vice-President Harris would mean "gold likely to dip," in O'Connell's view, "and that would likely then be well bid" by investment demand.
Shanghai bullion prices last night fell for the 4th session running from
last week's new all-time China gold highs for the world's 2nd largest economy and No.1 gold consumer nation.
Euro gold prices then rallied 0.5% on Tuesday from an overnight 2-week low of €2505 per Troy ounce, while the UK gold price in Pounds per ounce regained £6 from a 1-week low of £2103.
The Dollar fell for the 2nd session running on the FX market, heading for its lowest trade-weighted DXY index value against the rest of the world's major currencies in over 2 weeks.
Crude oil meantime held onto yesterday's near-3% jump after the Opec+ cartel of producer nations
agreed to delay easing output caps, holding European benchmark Brent above $75 per barrel.
The highest since 25th October, that's still $2 per barrel down for 2024 to date.
US borrowing costs in the bond market rose but held 0.07 points below Friday's 4-month high of 4.40% on 10-year Treasury debt.
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