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Highlights
- Bitcoin and gold experience significant gains ahead of US election.
- Both assets show potential benefits from rising market concerns and potential fiscal policies.
- Strong demand is observed through ETFs and broader market movements.
The anticipation of a potential election victory for Donald Trump has prompted a notable shift in financial markets, with bitcoin and gold gaining traction as alternative assets. Market activity has ramped up as traders position themselves, with bitcoin surging over eight percent across recent sessions, reaching as high as $73,564 in New York. Meanwhile, gold has also marked a fresh record, trading at $2,781.69 per ounce in Asia.
With heightened attention on the upcoming election, bitcoin and gold are increasingly seen as protective assets in light of fiscal uncertainty and rising geopolitical tensions. Bitcoin's recent activity reflects substantial inflows into the asset, particularly through US-based spot exchange-traded funds (ETFs), which have attracted approximately $3.6 billion in October alone. The popularity of bitcoin ETFs is contributing to a surge in price as it becomes more accessible to traditional markets. The Australian-based BTC Markets noted that, despite the increase, current trading volumes are still below peak levels from 2021, signaling a level of caution among retail participants.
Gold has experienced a similar uptick, driven by strong demand from institutional buyers and central banks, as reported by the World Gold Council. Demand for gold ETFs globally rose by 95 tonnes during the third quarter, particularly fueled by Western investors. The rise in demand has led to the first positive quarter for gold ETFs since early 2022. Traditionally, gold has an inverse relationship with the US dollar; however, it is defying this trend as both gold and the dollar rally simultaneously. Commonwealth Bank’s analyst Vivek Dhar notes this shift, highlighting that gold’s appeal is extending beyond the dollar’s usual impact as investors seek stability.
Geopolitical concerns and fiscal projections associated with a Trump presidency have amplified these movements. Trump has advocated for making the US a "crypto capital," a stance that aligns with a broader push for deregulation and economic policies favoring alternative assets like bitcoin. Amid this backdrop, market players are monitoring the US dollar’s trajectory, with some analysts forecasting a decline by year-end. This shift could bolster gold’s momentum, with projections suggesting prices may average $2,800 per ounce in the final quarter of the year.
Goldman Sachs projects that gold could see an additional ten percent increase to reach $3,000 per ounce by December next year, largely driven by consistent demand from central banks and institutional investors. As the election nears, the trends in bitcoin and gold indicate their appeal as potential havens amid fiscal and policy uncertainties.
