The analysts from the Royal Bank of Canada believe that the US election affects gold prices, as when Trump’s chances go high, so does the gold. Is it true?
How US election affects Gold trading?
Chris Louney of the Royal Bank of Canada (RBC) has stated the following:
“Gold reacts when Trump’s chances of winning rise above 40 percent or below 20 percent in the mainstream media. We’ve seen this peak-to-trough matching, but only on those limited bands when his chances really fluctuate.”
This theory has ground, as both of Trump’s highest polling stands have been occurring at the same time as gold saw its highs. In the beginning of August, when the bullion was changing hands at almost $1,400, Republican Nominee’s chances for the presidency were at 50 percent. In the same manner, the gold hit a high of $1,339, when the Trump’s chances for victory were at 46 percent.
Is the correlation right?
However, as Trump’s chances for the place in the White House have diminished, the gold has declined as well. Mr. Louney has highlighted the fact that over the past year, the precious metal hit the highs in July on the post-Brexit uncertainty. Currently, he believes that the political turmoil will most likely the key driver for the movements in bullion’s prices. Mr. Louney has commented:
“We note that gold prices receded by approximately $10 per ounce following the first U.S. presidential debate and were flat following the second debate, in line with the respective mainstream media reviews of the two debates.”
Moreover, the observation by RBC has led the analysts to the evaluation has the bullion has performed against the Trump’s chances for the presidency. As a fast, this week, Republican Nominee’s victory odds have slightly increased.
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