The Presidential Election and Gold

Investors are wondering whether gold would thrive after a Republican or a Democratic victory in the 2024 presidential election. The answer may be both!

An analysis of gold’s historical performance indicates that presidential elections do not have a major impact on the performance of the precious metal. Far more important are the geopolitical and macroeconomic factors that typically influence the gold price, including political instability, war, financial market volatility, central bank activity, the strength of the U.S. dollar, and interest rates.

Donald Trump has indicated a preference for a weaker dollar, which would be gold positive. Indeed, gold performed superbly during the Trump presidency, from 2016-2020, rising by 60-percent. But, a key driver of that move was the COVID-19 pandemic, which nearly brought the global economy to a standstill. Gold rose nearly 30-percent before COVID-19 during the Trump presidency and gained more than 30-percent during the pandemic. During the Biden presidency, gold has gained more than 30-percent, but that has been more a function of rising geopolitical risk and robust central bank buying than specific Biden policies.

Serious geopolitical risks will face either a Republican or Democratic president taking office in 2025, which may include continued high tension between the U.S. and China, Russia’s war against Ukraine that has much of Europe on edge, and the danger of war spreading in the Middle East. There is also the risk of a serious challenge to the outcome of the presidential election, as there was in 2020.

“A continuation of election-related uncertainty and rising geopolitical threats will add more volatility and likely impact broader macro variables,” says the World Gold Council. “This, in turn, could drive investors to evaluate how they might mitigate risk in their own portfolios and draw them towards a safe-haven asset like gold.”