CIBC Capital Markets' commodity analyst recently raised this year's and 2025 gold price forecasts as they look ahead to November's election.
Analysts pointed out that during President Trump's second term, gold may have a greater increase, although they believe that precious metals should perform well for any candidate as the US deficit continues to grow.
The analyst wrote in the report:" The rise in gold prices this year has been impressive. It is difficult to find an exact reason, but neither candidate seems to care about the US government's fiscal situation, which is certainly a factor. Similarly, the Fed (in some ways, all central banks) seems more comfortable with higher structural inflation. All of this is to say, we don't think Biden's second term should have a negative impact on the gold price, but if Trump is re-elected and sticks to his policy position, gold may rise again."
CIBC's latest forecast shows an average gold price of about $2,290 per ounce this year, rising to $2,600 per ounce in 2025.
CIBC also raised its average silver price forecast to $28.75 this year and expects an average silver price of around $34.50 in 2025.
After studying current President Biden and former President Donald Trump, CIBC said there were three key differences between the two candidates: taxation, trade, and Fed regulation.
Analysts explained that Trump's proposal to make tax cuts permanent would add $3 trillion to the US deficit over the next 10 years.
While Biden hopes to raise corporate tax rates, CIBC says he has a record of radical spending.
In terms of trade, Biden maintained Trump's tariffs and even imposed new tariffs on Chinese-made electric cars. Both candidates have proven themselves to be protectionists. However, given Trump's recent comments, CIBC expects him to take more aggressive action.
Analysts said:" Most worrying is the threat (greatly embellished by Trump's former trade representative, Robert Lighthizer) to impose a 60% tariff on Chinese goods. This would be achieved by revoking China's most-favored-nation status as a trading partner."
However, the Fed has the biggest impact on gold as it seems to be starting a new cycle of easing.
Analysts said:" Trump has said he will seek to reduce the independence of Fed decisions. Of course, central bankers have already lost confidence in their inflation expectations, but a Fed subject to strict political oversight will be very mild in terms of interest rate policies. Lower short-term rates will certainly be stimulating, and any attempt to lower the long-term yield curve through quantitative easing will be stimulating as well."
(Spot gold daily chart, source: EASTMONEY)
At 01:43 Beijing time, spot gold was quoted at $2,413.39 per ounce, up 1.78%.