This year, the gold price has performed well and climbed to a historic high. According to an analysis report released by the World Gold Council on Wednesday, this is not common in a presidential election year in the United States. Product structure, 10-30 billion yuan products operating income of 401/1288/60 million yuan respectively.

Juan Carlos Artigas, the Global Head of Research at the World Gold Council, said that historically, there is no direct, immediate impact of the US presidential election on gold performance. However, the election will be held in an environment of increasingly polarized voters (in the US and overseas) and significant geopolitical risks.

He said, "This may encourage investors to seek safe-haven assets such as gold to help them manage investment portfolio risk."

According to Dow Jones market data, prior to this year, gold had set a new intraday high in December 2023. Earlier, on August 7, 2020, gold had set an intraday high of $2,089.20. At that time, Trump was still the US president, and it was less than three months before Biden ultimately won the presidential election.

On Wednesday's US session, spot gold returned to the major level of $2430, but then fell slightly below $2396.

Deviation from the norm

This year's strong performance in gold seems to deviate from the historical pattern of presidential election years. A report released by the World Gold Council on Wednesday, titled "Ballots and Bullion," shows that gold performance around the US presidential election tends to be lower than its long-term average levels, although not particularly consistent.

The report shows that gold performance is slightly better in the six months before the Republican president is elected and then remains stable after the election. Before the Democratic president is elected, gold often performs poorly, and then performs slightly below its long-term average level in the six months after the election.

Demand for gold bars and coins

Meanwhile, analysis by the World Gold Council shows that demand for gold bars and coins in the US has "increased significantly" during the Democratic presidential term. However, the Council acknowledges that this observation alone "is not enough to determine the direction of gold trend", especially considering that this observation is not reflected in US gold ETF demand or Comex futures positions.

The World Gold Council stated that, as Democrats are expected to win, gold coin sales at the US Mint tend to soar.

The average number of ounces of gold coins sold through the Mint to authorized purchasers is approximately 60,800 ounces. The Bureau of Engraving and Printing sells gold coins to official distributors that are wholesalers and financial institutions, rather than selling directly to the public.

In the past 37 years, the average total gold sales to authorized purchasers by the Mint during months when the Democrats won the elections was 86,400 ounces, while that during the months the Republicans won was 71,000 ounces.

The report said, "There is anecdotal evidence suggesting that retail buyers of gold bars and coins may tend to favor Republicans, which may partly explain the increases in demand before and after elections, especially during Democratic victories."

This pattern persists after the election month, with monthly average gold sales of about 0.079 million ounces during the 13 months after the Democratic victory, compared to only 0.0325 million ounces during the months after the Republican victory.

During the election season, the average demand for gold bars and coins was about 25 tons when the Democrats won, which is higher than the 12 tons when the Republicans won during the same period. In the following four quarters, when the Democrats control the White House, the average gold demand is about 26 tons, while it is 7 tons when the Republican party is in power.

The report said that the survey results "indicate that physical gold demand tends to increase during Democratic government’s tenure, whether due to demography, political affiliation, or broader economic concerns."

However, the company stated that this does not apply to other areas of investment demand. The report emphasizes that when it comes to US gold ETF demand or Comex futures positions, these results do not hold.

Meanwhile, the World Gold Council said that during the US election, partisan relations have no sustained impact on the price of gold. Instead, the domestic and international economic policies of any president are more relevant to the prices of financial assets, including gold.

In other words, this year's election year is unique. The World Gold Council stated in its report that in addition to seeing how gold has performed during previous election periods, this time "we have an extra advantage, which is knowing how gold has performed during the previous Trump administration."

In addition, although Biden has withdrawn from the race, his gold performance during his presidency can be analyzed. Assuming that his policies will "continue" under a potential new Democratic government, the report states that the leading Democratic presidential candidate is Vice President Kamala Harris.

Artigas of the World Gold Council said that gold has performed well during the previous Trump administration and thus far during the Biden administration. He said, "This is due in part to some of the indirect effects of the economic and fiscal policies of the two presidents, but also because of other independent global factors."

Artigas said, "Whether Trump or Harris wins, the current geopolitical environment, combined with the impact of falling interest rates in developed markets, may continue to support the performance of gold."

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