Tags: Money | gold | prices | president

How the President Affect's Gold's Prices

By    |   Sunday, 12 July 2015 11:24 PM

When a president offers a big speech, analysts say, his message has the power to affect global financial markets, including gold.

Likewise, government's reaction to foreign crises can also send stock prices soaring — or falling — as evidenced in 2014 when the conflict surged between Ukraine and Russia, which sent gold upward by two percent, MoneyMorning.com reported.

Two years before that conflict, anticipation was high for a gold-price surge when President Barack Obama was re-elected for a second term, with many expecting that his economic stimulus package would continue. Those wishes from investors were rewarded, both inside the United States and in foreign markets, when both gold shares and bullion prices roared, Mining.com reported.

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Mining.com's Marc Howe wrote: "Obama's election victory has been interpreted by markets as highly favorable for the precious metal due to expectations that a second term for the incumbent U.S. president will mean further easing of monetary policy and greater inflation."

When a president supports a monetary policy that slows inflation, gold stocks are harmed. An increase by the Federal Reserve in interest rates, for example, could serve to soften gold prices, Market Realist noted.

A president affects monetary policy through his pick of a Federal Reserve chair, aligning his interests, often political, with that of the person chosen for the job. While the Fed acts independently, words from current chairwoman Janet Yellen, nominated for her post by Obama, during her confirmation hearing last fall had a direct effect on the gold market, MarketWatch.com reported.

She was asked by a senator about her interest in gold and what she thought made prices fluctuate. Gold prices rose the next day.

“Well, I don’t think anybody has a very good model of what makes gold prices go up or down,” Yellen replied to Sen. Dean Heller in her testimony before Congress.

“But certainly it is — it is an asset that people want to hold when they’re very fearful about potential financial market catastrophe or economic troubles and tail risks," Yellen noted. "And when there is financial market turbulence, often we see gold prices rise as people flee into them.”

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When a president offers a big speech, analysts say, his message has the power to affect global financial markets, including gold.
gold, prices, president
Sunday, 12 July 2015 11:24 PM
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