By Neils Christensen of Kitco News
Thursday October 20, 2016 15:00
(Kitco News) - The U.S. presidential election is in its final leg and one gold analyst says that either a Democratic or Republican win will be positive for gold.
Following the final presidential debate Wednesday, Democratic presidential candidate Hillary Clinton holds a commanding lead over Republican candidate Donald Trump, 49.3% to 43%, according to the latest results from fivethirtyeight.com.
George Milling-Stanley, head of gold strategy at State Street Global Advisors, said that a Clinton victory would represent the status quo and not shock financial markets. He added that her policies are seen as inflationary, which could be seen as a long-term positive for the yellow metal.
Turning to Trump, Milling-Stanley said that because of his expected policies, there could be some shocks in markets and investors could turn to gold as a safe-haven investment.
“I think gold’s rise would be slightly more dramatic with a Trump victory but ultimately, it’s hard to see gold going down no matter who wins,” he said.
Although uncertainty ahead of the presidential election is providing some support for gold, Milling-Stanley said that it’s the Federal Reserve and monetary policy that will have the biggest impact on prices in the medium term.
Expectations for a Fed rate hike continue to firm up with markets now pricing in a more than 70% chance of a move by the end of the year. He added that similar to last year, he sees the potential for a renewed rally after the central bank’s decision.
“From my point of view, it would be healthy for all investors if the Federal Reserve just got on with it and raised rates,” he said. “If we only see a 25-basis-point move, real interest rates will still be in negative territory and that will be good for gold.”
In this current environment, Milling-Stanley said that he is expecting gold to continue to trade in a range with support around $1,200 and resistance at $1,350. He added that he expects $1,200 to present a solid floor for the market because of the political uncertainty, coupled with global low and negative real interest rates.
“Right now, in my mind, the risks for gold are to the upside. I’m not expecting gold to go significantly lower from these prices,” he said.