COMMENT – Gold, crude oil in focus as Biden wins U.S. presidential race


Democrat Joe Biden’s victory in the US presidential polls will likely herald a Tale of Two Commodities: gold and crude oil marked by their contrasting fortunes.

While gold is likely to acquire a brighter hue in coming weeks with a decisive victory for Biden, crude oil is likely to go in the opposite direction.

The reasons for this are easy to fathom.

With rising Covid cases in the US, policy makers will probably veer towards more monetary easing, though the timing of a broader economic stimulus package remains unclear.

Biden confidantes have said that the new president will probably give Donald Trump a bit of time to digest the news of the transition before announcing new policies. That may also be so since Trump has contested the vote count in several places and challenged it legally.

Demand for gold continues

The uncertainty is boosting the demand for gold. Prices of the precious metal crossed $1,950/troy ounce and appears headed for its all-time high of above $2,000/ounce reached in early August.

Moreover, physical gold demand in India and China — two of the biggest consumers — is also expected to pick up in coming weeks.

A weaker dollar in light of the political uncertainty has helped base metals. In particular, market sentiment about copper and nickel have been boosted by China saying it will aim to have new energy vehicles accounting for about  20% of total car sales by 2025.

Crude under pressure

However, the fresh surge of Covid cases in Europe and the U.S. may moderate the sentiment, especially as new lockdowns have been announced (in Greece).

The International Monetary Fund has projected that the world economy will grow by 5.1% next year, revising it from a previous forecast of 5.4%.
Still, a US economic stimulus package could provide a strong boost sooner than later.

On the other hand, Biden’s ascension would likely exert downward pressure on crude oil.

There are worries that the new U.S. administration will either ease or remove sanctions on Iran and Venezuela, which will send a gush of new oil into global markets at a time the Organization of Petroleum Exporting Countries (OPEC) is mulling whether to reinstate production cuts in January.

Earlier, the OPEC had said that it would accelerate the recovery in production in a meeting that was scheduled for January.

It is almost a given that Biden will move towards greener energy options as that was part of his campaign promise. That would mean billions of dollars towards green energy research and development, which will ultimately impinge on oil demand.

Under a Democratic president, the US will re-join the Paris Climate Change accord, thereby again impacting fossil fuels demand. However, the impact on natural gas might be less pronounced than crude oil.

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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