A Perfect Storm for Gold Prices

gold nugget on stock chart

There are a lot of different reasons why gold prices can take flight, and at least a few of them are in play at the moment.

  • Unstable Market – Of course, this is the big one, gold is always considered a safe haven in an unstable market. And, in this instance, the U.S. presidential election is presenting all of the instability you could wish for. Most insiders also agree that a Trump presidency would be so disruptive, both economically and politically, that gold prices would continue to rise and remain higher for a good long while after the election.

Which is not to say that a Clinton presidency would be bad for gold prices. Gold happens to be in the happy position of benefiting from either presidency. Though possibly not rising as high or as long as for a Trump win, most experts believe that a Clinton win will be at least slightly inflationary. And gold, of course, is frequently a favorite hedge against that situation.

Naturally, whatever the Fed decides to do about interest rates will also affect the market, so some of the instability is due to trying to second guess it.

  • Stable Dollar – As much as gold prices float higher during an unstable market, so do they love a stable dollar. And that has recently been the case.
  • Soft Housing Market – The latest report from the U.S. Census Bureau and the Department of Housing and Urban Development revealed some unhappy news for the housing market. Not only did housing stats fall 9% from August’s rate, but they are also down close to 12% from last year. To make matters worse, it is the first time in more than a year that the pace of housing construction has slowed this much.

Not good news for the housing market, but gold prices remained steady after the report, even though they were barely off session highs.