Precious Metals Steady Ahead of U.S. Presidential Election

 

Precious Metals Steady Ahead of U.S. Election, Pivotal Fed Meeting

(Bullion News Network) – Gold and silver prices steadied this morning to open the week. With a controversial, close election concluding in just eight days, it should come as no surprise that large traders are holding tight before the outcome of this race becomes final. Uncertainty surrounding both the U.S. election cycle and a full slate of geopolitical conflicts in Europe and the Middle East has been a primary driver of metal prices throughout the year. In a sense, analysts anticipate that markets will brace for impact before votes are tallied starting on November 5th. 

Precious metals tend to thrive in environments characterized by instability or uncertainty, so a hotly contested U.S. presidential election drove traders toward safe haven assets like gold and silver for much of the year. At least two foiled assassination attempts against former President Donald Trump, the Republican candidate, fueled gold and silver price runs in July and August. In September and August, the national conversation focused both on economics and foreign policy, introducing more speculatory traders to markets as investors flee to safe haven assets to hedge their bets.

A proposal to institute universal tariffs by Mr. Trump was met with skepticism from some economists, many of whom argued that such a policy would significantly increase consumer prices. Likewise, economic policy proposals from Vice President Harris have faced criticism from the Republican Party, as has her perceived role in an inflationary economy during President Joe Biden’s administration. 

On the foreign policy front, voters are being asked to consider how each candidate would respond to conflicts in both the Middle East and Ukraine. Israel’s war with Hamas in Gaza continues to escalate, and the small country has also reignited conflicts with Lebanon-based military group Hezbollah and Iran. Last week in Ukraine, intervention by North Korea sparked fears of a regional conflict between North and South Korea, with the latter threatening to provide military aid to Ukraine if North Korea continues to support Russia. The winner of the 2024 U.S. presidential election will be tasked with deciding his or her approach to promoting de-escalation while still maintaining American strategic and military objectives in each war zone. 

These ongoing debates surrounding the election cycle have played center stage in what has been a historic year for gold and silver markets. Gold logged multiple all-time highs throughout the year, aided both by uncertainty in the election and geopolitical-economic stressors. Silver outperformed gold this year, gaining over 35% on the year and logging a twelve-year high last week. 

The results of the 2024 presidential election will play a major role in determining where gold and silver prices head in 2025. As the election cycle draws to a close, traders are steadying – and so are the markets. Gold lost just $5 today and remains elevated above $2,740/oz, while silver still remains at a yearly high above the $33-33.50 level. 

How will the election impact precious metals?

With the 2024 election still far too close to call, investors are wondering how a Harris or Trump administration may impact their gold and silver portfolios.

Read our report here: https://t.co/Vd4BpSLCeE

— Hero Bullion (@HeroBullion) October 25, 2024

The Federal Reserve Meets Next Week – Here’s What Precious Metal Investors Should Expect. 

The Federal Reserve’s Federal Open Market Committee (FOMC) will meet on November 7th, just two days after Americans hit the polls to vote, to set the federal interest rate. Speculation surrounding interest rate cuts has played a significant role in price action across precious metal markets, with gold rocketing past several all-time highs in the wake of a surprise 50 bps rate cut in mid-September. Markets opened the month with high hopes for another jumbo cut from the FOMC as Fed Chair Jerome Powell works toward a soft economic landing. 

Odds of a 50 bps cut fell sharply after favorable inflation and job market readings. Inflation cooled again in September, and the job market remained sturdy after the Fed’s jump 50 bps rate cut. The U.S. is not out of the woods yet, though. Some analysts anticipate a sharp drop in job creation this month. Since the job market report for October will be the last chunk of data the Fed receives before that November 7th meeting, the tone and tenor of these numbers will play a pivotal role in how aggressive the FOMC decides to approach the national interest rate. 

Right now, CME Group’s predictive tool FedWatch anticipates around a 95% chance that the Fed will move to cut interest rates by 25 basis-points and a 5% probability that rates remain the same after the November 7th meeting. These odds could quickly change next week if the job market appears to cool or inflation numbers increase beyond expectation. 

Metals steadied today as traders brace for next week’s U.S. elections, but a litany of undecided factors mean that a more volatile market may be just around the corner.