What will happen to gold prices?

The outcome of the US election could have a big impact on gold prices. If there is a democratic victory (partial or total), the impact on gold prices would be limited. In the event of a universal tariff under a Trump presidency, we would likely see lower gold prices, while in the long term these moves would likely be reversed, notes Georgette Boele, currency strategist at ABN AMRO.

Gold prices will fall if Republicans win

“The evolution of the gold market from just a safe haven and jewelry market to one where investment decisions play a bigger role is important. Indeed, since the introduction of gold ETFs (March 2003), gold has developed more into a speculative asset and behaved less like a safe haven asset. Consequently, developments in the US dollar, monetary policy and real yields have become the dominant factors over time.”

“Of course, there are still investors buying physical gold for safe haven purposes, but flows into non-physical gold have often been dominant. What do we expect for gold prices under the different scenarios? If there is a Democratic victory (partial or total), we think gold prices could be very modestly supported as we expect a modest decline or a neutral USD and some lower real yields. We expect gold prices to remain around $2,500 per ounce.”

“A Republican victory brings a more complicated dynamic. In the scenario of a full implementation of tariffs, we expect the first few years of the president’s term to see inflation rise, the Fed to hike and the USD to recover due to divergence and monetary policy weakness elsewhere. As a result, gold prices will suffer and gold prices could fall below the 200-DMA and reach $2,000 per ounce. After that, we expect the USD to weaken and real rates to fall. This will provide room for gold prices to rise again and move beyond the highs set in early 2024.”