Gold & Elections

September 23, 2016 01:41 PM

In previous articles, we examined gold’s performance in the presidential election cycles. The only relatively reliable conclusion we were able to draw from the long-term analysis is that the post-election year is the worst for the price of gold in the whole cycle. Let’s now focus on gold’s short-term dynamics around election time.

The two charts below show the dynamics of gold prices 30 trading days before an Election Day and 30 days after. The first chart shows that gold prices 30 trading days before and after U.S. Presidential Elections in the 1970s and 1980s (index: the price of gold from the Election Day = 100). The second chart shows gold prices 30 trading days before and after U.S. Presidential Elections in the 1990s and 2000s (index: the price of gold from the Election Day = 100).


Again, no clear pattern emerges. For example, after the elections in 1972 gold continued for a week its downward trend which started a few weeks before, reaching a bottom before it rallied later. On the other hand, in 1976 the yellow metal continued its upward trend and jumped 2.73% the day after elections. It seems that elections do not significantly move the gold market, at least over two-month spans. But what if we extend or shorten the periods?

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