On November 8, 2022—election day—the price of gold surged 2.1%. This jump was part of a larger 5% upward movement in gold’s price that began several days earlier. Likewise, silver prices also saw growth, rising 10.5% over the same period. Demand for precious metals such as gold has risen in the current environment of political uncertainty.
The lead-up to the midterm elections may have provided the spark that sent precious metal prices rising.
Gold rose to a monthly high of $1,712/oz. on November 8, 2022, the same day silver rose to $21.48/oz., its highest price since June 2022. Each of these precious metals started rallying in price in the days leading up to the 2022 midterm elections.
If history is any indication, these price increases may continue. In more than 60% of cases dating back to 1970, gold prices have climbed in the six months following midterm elections, according to data from the World Gold Council (WGC). The Council also reports that a tightly contested Congress may also lead to strength for gold. The last three times Congress entered gridlock—different parties controlling the House of Representatives and the Senate—gold prices surged 4%, 13%, and 5%.
Gold demand has also increased on a global scale.
According to WGC data, in Q3 2022 central banks broke quarterly records going back to 2000 by purchasing 399 metric tons of gold worth around $20 billion. These purchases also mark the highest level of central bank demand for gold since 1967.
According to Bloomberg, quarterly purchases may be even higher since China, Russia, and other countries don’t fully report their gold purchases regularly. Officials from the WGC said, “Not all official institutions publicly report their gold holdings or may do so with a lag. We can’t rule out further unreported buying.”
Some analysts predict that gold’s prices could be ready to rally further.
Swiss bank UBS predicts a rebound in gold prices, saying they will rise 13%, to around $1,900/oz., by late 2023. Analysts from the banking giant wrote, “We think gold should benefit, and therefore holding a long gold position would offer an attractive risk-reward as the [monetary] tightening cycle ends,” in a November 7, 2022, note, pointing to a potential shift in Federal Reserve policy as one of the main reasons gold prices may move higher.
These signs of growth in gold’s demand may be part of a larger global trend that could continue to impact gold prices through 2023.
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