Gold Prices Hit Monthly High Amid Election Fears

On Wednesday gold prices broke the $1,300 level, their highest since early October as election anxieties brought stocks and the dollar downward. Gold ended the day surrendering half its gains following the release of the Fed’s rate announcement and found support below the $1,300 level with lows just above $1,295.

The Fed’s delay was highly expected and is seen by many as setting the stage for a December move. The probability for an increase Wednesday came in at only 7% while the odds of a December move jumped to 74%. Also suggestive was the fact that FOMC dissenters voting for an immediate hike fell to two, down from three last month.

However, an interest rate hike in December isn’t a foregone conclusion; there’s still the US presidential election to contend with, and there’s still plenty of fear out there among investors. “This unbelievable election season we’re going through isn’t exactly engendering confidence,” stated Richard Sichel, chief investment officer at Philadelphia Trust Co.

Subsequent to the FBI re-opening the investigation into Hillary Clinton’s email scandal, investors are beginning to re-think their certainty of her victory on November 8^th. Uncertainty is also growing due to recent polls showing that Trump may be gaining ground.

“Having already been caught offside by Brexit earlier this year, the increase in U.S. political uncertainty has traders fleeing into gold as a safe haven for capital,” said Colin Cieszynski, chief market strategist at CMC Markets.

FXTM’s chief market strategist, Hussein Sayed is among a growing number of investors looking for a bullish gold market moving into December and 2017. “Gold is likely to be the most wanted asset to hedge against political risks, and although it jumped 4% from October’s low, there is still much potential to go higher from current levels,” he stated.

A large part of gold’s potential for future growth stems from years of low interest and inflationary pressure built up from bad monetary policy. Low interest rates and quantitative easing have created a situation that is protective of gold prices. Peter Schiff explains:

“Even if [the Fed] tightens, it’s not enough. I think the inflationary forces that have already been unleashed are not going to be rebottled with small rate hikes. Even if central banks tighten, real interest rates are still going to be falling because the cost of living or the inflation rate will be rising faster than the tightening. The only way to really hurt gold would be for central banks to become aggressive inflation fighters, to really get out in front of the curve, and to raise interest rates substantially. I don’t see any of that happening.”

Although it’s too little too late for the Fed with respect to inflation, those looking to hedge against inflationary destruction can still buy gold and silver to retain their wealth.

Get Peter Schiff’s latest gold market analysis – click here – for a free subscription to his exclusive weekly email updates.
Interested in learning how to buy gold and buy silver?
Call 1-888-GOLD-160 and speak with a Precious Metals Specialist today!