US Presidential Election Timeline and Implications for Gold Costs

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US Presidential Election Timeline and Implications for Gold Costs

The US Presidential election has a historic tendency to affect monetary markets as a change in management usually brings a shift


The US Presidential election has a historic tendency to affect monetary markets as a change in management usually brings a shift in fiscal coverage. For the worth of gold, there was higher responsiveness to the macroeconomic panorama change since President Richard Nixon took steps to finish the Bretton-Woods system beginning in 1971.

Gold Price Chart Performance During US Presidential Election Years

Nevertheless, a have a look at the historic impression of the US Presidential election gives little proof of a linear relationship between the worth of gold and the end result based mostly on get together affiliation. Bullion struggled underneath Clinton, whereas the dear metallic traded to a file excessive value in 2011 with Obama within the White Home. The identical might be stated about Republican candidates as gold costs weakened in the course of the Regan period, however elevated in the course of the two phrases underneath George W. Bush.

Efforts to attribute a particular market response based mostly on a candidate’s get together affiliation is a apply of nuance particularly when exterior basic components like seasonality and financial cycle are considered. Many contrasting observations will be created from totally different regimes as monetary markets have seen bubbles and crashes throughout numerous presidencies.

Nonetheless, one statement to use to the distinctive state of affairs of current situations is that gold costs have develop into extra risky within the 21st century, and it stays to be seen if the pattern will maintain for the 2020 election because the financial shock from the COVID-19 pandemic clouds the macroeconomic outlook.

Gold performance chart during election years

Supply: Information from Bloomberg

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Monitoring the efficiency of gold costs throughout election years might assist to shed some gentle by wanting on the common efficiency within the yr previous and following elections since 1980. The examine displays the dear metallic (pink line) rallying in the beginning of the yr, however hitting a peak within the second-half to pattern decrease in November.

1980 – Ronald Regan (R)

Gold price chart performance during 1980 election Ronald Regan

Supply: Information from Bloomberg

In 1980, the value of gold hit a excessive of $850 in January because the Federal Reserve underneath Chairman Paul Volcker was on target to push US rates of interest in direction of 20% to curb inflation, however the advance from the beginning of the yr was short-lived as the dear metallic registered the 1980 low ($482) in March. Bullion recovered to commerce above $600 forward of the November Four election, however consolidated all through the rest of the yr to carry round $590 forward of 1981.

1984 – Ronald Regan (R)

Gold price chart performance during 1984 election Ronald Regan

Supply: Information from Bloomberg

In 1984, gold costs briefly traded above $400 in March because the Federal Reserve pushed the benchmark rate of interest again above 10%, with Chairman Volcker nonetheless on the helm after being nominated to serve a second time period in 1983. Bullion steadily weakened over the approaching months, with the November 6 election doing little to prop up the dear metallic although incumbent Ronald Regan received a second time period. In flip, the worth of gold continued to float decrease following the 1984 election to register the yearly low ($308) in December.

1988 – George Bush (R)

Gold price chart performance during 1988 election George Bush

Supply: Information from Bloomberg

In 1988, the worth of gold registered the yearly excessive ($482) in January, however dipped beneath $400 in September because the efficient Federal Funds price elevated forward of the November Eight election, with the US central financial institution led by Alan Greenspan, who was nominated by Regan in 1987. The victory by Bush did little to sway gold costs, with bullion buying and selling sideways all through the rest the yr to finish 1988 round $410.

1992 – Invoice Clinton (D)

Gold price chart performance during 1992 election Bill Clinton

Supply: Information from Bloomberg

In 1992, bullion held above $350 till March, with the dear metallic weakening all through the primary half of the yr although the Federal Open Market Committee (FOMC) caught to its price easing cycle following the recession within the early 1990’s.

Chairman Greenspan continued to chop US rates of interest forward of the November three election after being reappointed by Bush in 1991, however the value of gold remained underneath stress after Clinton received the presidency, with the dear metallic registering the yearly low ($332) simply days after the election. Gold traded in a slim vary for the rest of the yr, with bullion ending 1992 round $335.

1996 – Invoice Clinton (D)

Gold Price Chart Performance During 1996 Election Bill Clinton

Supply: Information from Bloomberg

In 1996, gold climbed above $400 in the course of the first quarter because the Federal Open Market Committee (FOMC) stored US rates of interest unchanged, with Chairman Greenspan nonetheless on the helm after being reappointed for a 3rd time period earlier within the yr by Clinton.

Nevertheless, the worth of gold held beneath $400 all through the rest of the yr although Clinton received a second time period, with bullion shortly giving again the rebound following the November 5 election to shut out 1996 round $368.

2000 – George W. Bush (R)

Gold price chart performance during 2000 election George W Bush

Supply: Information from Bloomberg

In 2000, the worth of gold recovered in the beginning of the yr although the FOMC continued to embark on its price mountaineering cycle from 1999, with the dear metallic buying and selling above $300 in February.

Nevertheless, the worth for bullion declined within the incoming quarters although the FOMC had carried out its final price hike in Could, with the dear metallic marking the yearly low ($264) simply days after the November 7 election. Gold costs nudged larger over the rest of the yr to finish 2000 round $272 as Fed Chairman Greenspan, who was serving his fourth time period after being reappointed by Clinton, stored US rates of interest on maintain.

2004 – George W. Bush (R)

Gold Price Chart Performance During 2004 Election George W Bush

Supply: Information from Bloomberg

In 2004, the worth of gold traded as excessive as $426 in the course of the first quarter because the Federal Reserve stored US rates of interest at 1.00%, however slipped beneath $400 on quite a few events forward of the November 2 election as Chairman Greenspan, who was serving an unprecedented fifth time period after being reappointed by George W. Bush, started mountaineering charges within the second half of the yr. Gold costs elevated after Bush received his second time period, with bullion registering the yearly excessive ($456) in December.

2008 – Barack Obama (D)

Gold Price Chart Performance During 2008 Election Barack Obama

Supply: Information from Bloomberg

November 4, 2008

In 2008, the worth of gold briefly climbed above $1000 in March because the FOMC lowered US rates of interest in response to the sub-prime housing disaster, however traded as little as $721 forward of the November Four election even because the central financial institution underneath Chairman Bernanke delivered two separate price cuts in October. Gold registered the yearly low ($712) simply days after Obama received the election, with bullion recovering all through the rest of the yr to shut out 2008 round $882.

2012 – Barack Obama (D)

Gold Price Chart Performance During 2012 Election Barack Obama

Supply: Information from Bloomberg

November 6, 2012

In 2012, the worth of gold began off the yr simply above $1600 and pushed as excessive as $1781 in February, however ended up registering the yearly low ($1540) in Could although the FOMC stored US rates of interest near zero. Gold costs recovered forward of the November 6 election to commerce again above $1700, however the rebound unraveled regardless of Obama successful a second time period as the dear metallic ended the yr round $1675.

2016 – Donald Trump (R)

Gold price chart performance during 2016 election Donald Trump

Supply: Information from Bloomberg

November 8, 2016

In 2016, the worth of gold began off the yr beneath $1100 because the FOMC led by Chair Janet Yellen elevated US rates of interest on the finish of 2015, however traded as excessive as $1366 in July because the central financial institution stored the Federal Funds price in a variety of 0.25% to 0.50%. Nevertheless, gold costs slipped beneath $1300 forward of the November Four election, with the victory by Donald Trump doing little to shore up the dear metallic as bullion closed out the yr round $1148.

2020 – ?

Because the collapse of the Bretton-Woods system, numerous basic components will be attributed to the adjustments within the value of gold, however a have a look at the timeline of the US Presidential election gives little proof of a linear relationship between bullion and get together affiliation although the dear metallic has develop into extra conscious of the macroeconomic surroundings.

With that stated, the examine does point out that gold costs have develop into extra risky within the 21st century, and it stays to be seen if the pattern will maintain past the 2020 election because the valuable metallic trades to contemporary file highs this yr.

— Written by David Music, Foreign money Strategist

Observe me on Twitter at @DavidJSong



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