Demand for Gold Rising, Fear is in the Market
A Donald Trump victory in the US presidential election in November would probably lift Gold prices, according to the Mint that refines almost all the bullion output from one of the world’s biggest producers.
“If someone like Donald Trump does get elected, it will stimulate some fear within the economy as to where things are going,” Richard Hayes, CEO of the Perth Mint, said in a TV interview. “Trump is very much a protectionist, he is very much for almost ‘Fortress America’.”
Gold has rallied about 27% this year on demand for haven assets following the UK’s vote to leave the EU and as the US Fed refrains from raising interest rates. The US race is close after the conventions last month, with polls showing Democratic nominee Hillary Clinton holding a slight lead over Republican Donald Trump.
The markets have yet to deal with the political uncertainty going into the U.S. contest.
“If Clinton is elected, I suspect the run up will not be quite as strong,” said Mr. Hayes, speaking last Monday at the opening day of the Diggers and Dealers mining forum in the Western Australian town of Kalgoorlie. “She is more mainstream, and probably the economy will be less likely to suffer shocks.”
Bullion for immediate delivery traded at 1,341.4 oz Friday at the close in New York.
Demand is holding up well even as markets “have gotten used to the economic crises” after the UK’s vote to leave the EU, said Mr. Hayes, adding that concerns about growth were supporting consumption. “I think what we will see if Trump is elected is a rise in the Gold price.”
Donald Trump is targeting working-class voters by emphasizing his opposition to deals such as the North American Free Trade Agreement (NAFTA).
Gold’s rally is set to endure, with the US election seen as the next big catalyst for prices, according to Australia’s Northern Star Resources Ltd. The US vote will have more of an impact on Bullion than the UK referendum, Bill Beament, Managing Director at Northern Star, said last month.
The sting of the Brexit surprise reminds us of the prevailing uncertainty.
Have a terrific week,