Analysts have predicted a bearish outlook for the US dollar as the nation faces a presidential election in 2020. Despite Donald Trump’s win followed by the fall of the US currency, one expert says gold is right. In contrast, Bitcoin stands to gain from the election.
The Effect of 2020 US Presidential Election on Gold, Dollar, and Bitcoin
Analyst and consultant Dan Popescu has shared his views on how several markets could be affected by the outcome of the US presidential election. He addressed the prospects of the gold market and the US dollar on the “IG Trading the Markets” show, which he shared on Sunday, before and after the U.S. presidential election. Popescu is specialized in gold, silver, and forex. IG is the leading provider of online forex trading.
“The markets expect [Joe] Biden to win right now, and that’s one of the things I’m pretty sure has been bullish about the price of gold and the collapse of the dollar index, and that’s going to continue,” Popescu described. Citing current polling showing Biden to be the most likely nominee to win the presidential election in 2020, the analyst said the dollar would fall and gold would rise even higher before the election.
Popescu also addressed what would happen to the gold and currency markets if Donald Trump won the November election. “The American stock market is very bullish, and Donald Trump loves it because it reduces taxes for the super-wealthy, it reduces taxes more for the stock market, which was very positive for the stock market,” he said. When Trump wins on the election night, then the dollar will rise along with the stock market and gold will fall, he explained. He said, however, that it will be temporary “because with Donald Trump the monetary crisis would escalate even further.” Popescu tweeted this in the short term:
Gold will correct with Trump victory followed by the collapse of the US dollar and explosion of gold to $5,000 faster with Trump than with Biden but up irrespective of Trump or Biden. Both are bearish US dollars.
Many analysts see the vulnerability of the dollar too. “Shrinking its interest-rate advantage makes the USD less attractive and encourages investors to accept deposits in other currencies,” CNBC quoted Patrik Schowitz of JPMorgan Asset Management as saying. “These cyclical factors are not going to turn around in a hurry and there is likely room for the US dollar to fall further.”
Blackrock strategists see the weakness of the dollar continuing in the near term as well. They noted, “The prospect of the dollar retaining its perceived safe-haven status is another concern.” Goldman Sachs warned last month that the US dollar risked losing its current status as a world reserve.
Devere CEO Nigel Green believes the U.S. election will raise the bitcoin price. “Bitcoin is now one of the year’s best-performing assets, up by some 70 percent year-to-date,” he said. “We should anticipate the U.S. presidential election and the weakening of the U.S. dollar to further fuel the world’s largest cryptocurrency for the remainder of 2020, which would act as a high octane price push”
As uncertainty heightens, investors will pile into safe-haven assets, in particular those not tied to any specific country, such as bitcoin and gold.
How do you think the U.S. election will affect bitcoin, gold, and the dollar? Let us know in the comments section below.