How the US presidential election affects gold and oil markets
Barack Obama was elected for President of the United States for a second term. This could suggest that he will extend his support to Ben Bernanke in his position of a Chairman of the Federal Reserve. Now, Bernanke could hope for a third term in 2014. Therefore, it is likely that the current monetary policy will continue. This is a great news for gold prices.
The reelection of Obama as US President triggered immediate optimistic reaction among market participants and gold jumped to $1,723.2 per ounce, $40 or 2.4 percent in a day.
Gold bulls expect a price of $3,500 by the end of 2013, if this rally continues.
During the past 4 years, the government of Barack Obama became famous with its ill-measured money spending. The gap formed by high-spending policy cannot be filled by government revenue. So, it is filled by money printing. This process devaluates the dollar and triggers raise of the gold price.
The second term for Obama is also of a significance for the oil price. There is little hope that the President would develop new fuel strategy. There would be no future expansion of gas and oil gathering on offshore and federal land. The House of Representatives plans to double the amount of fuel import in July. Obama said that he would most likely put veto on that bill.
A great jump in oil prices is expected if the US economy doesn’t step back on track. This winter the prices might rise to $95 – $96 per barrel, before eventually falling back again.
At present, light sweet crude for December delivery is down 29 cents to $88.42 per barrel, while Brent North Sea crude for delivery in December lost 52 cents to $110.55.
