Gold likely to benefit from tightly-contested U.S. poll

In a closely-fought U.S. presidential election, gold prices are down a bit with a strengthening of the US dollar. But safe haven demand for the precious metal is expected to rise if the uncertainty over the poll outcome continues to linger.

International gold prices are down 0.85% at $1,898/troy ounce, just a tad off the psychological benchmark of $1,900/troy ounce.

Most poll surveys had predicted a clear win for Democratic presidential nominee Joe Biden, but the forecast appears to have missed the mark as incumbent Donald Trump appears to have recovered ground despite criticism of his handling of the Covid pandemic.

Now analysts are saying that it could be days before the election verdict is clear. There are possibilities that irrespective of the outcome the results will be contested in court.

“If Trump comes in, then the dollar will strengthen and  commodities will fall across the board,” said Gnanasekhar Thiagarajan, director at Commtrendz Risk Management.

“If the results get extended, then it will be a news-driven market.  Gold might benefit as everyone will pile on to it as a safe haven.”

Gold prices had breached an all-time high of $2,000/troy ounce in early August, but have since then come down a bit due to profit booking. It was expected that gold prices would again rebound close to the US presidential polls.

Sharp rebound still awaited

Despite some gains due to safe haven demand, a sharp rebound may have to wait until the formation of a US government as an economic stimulus package won’t be passed. A Biden victory may herald a larger stimulus package, while a Trump win may see a smaller package, according to analysts.

While the market has been trying to price in the poll outcome, the COVID-19 pandemic entered its second wave in both the U.S. and Europe and ushered in the risk of further restrictions that will damage economies. Investors shied away from markets in October due to the twin uncertainties of the election outcome and the COVID’s surging second wave.

“Everything macroeconomic continues to be gold bullish long-term and short-term, or sideways at worst,” says Paul Wong, analyst at Sprott Inc, adding that the long-term bullish trend remains intact.

Another analyst concurred that a Biden victory would be more supportive of gold.

“Looking to 2021, trends favour a broad commodity-market advance led by metals. A Democratic sweep is more likely to accelerate the trajectory,” said Mark McGlone, analyst at Bloomberg Intelligence.

He said gold remains at the top of the commodity picks for this year.

Biman Mukherji is a columnist and consulting editor at He has worked for international news organisations such as Reuters, The Wall Street Journal as well as for newspapers like The Times of India. He can be reached at

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