Gold has played a pivotal role in human societies for thousands of years. From its uses in jewelry and technology to serving as a monetary standard for major economies, gold has held multifaceted significance in history. Today, the appeal of physical gold endures, driven by its reputation as a hedge against economic volatility and a store of wealth. And while the price of gold is influenced by a wide range of factors that interact in complex ways, the U.S. economy continues to be a major driver of gold prices globally.
Gold is commonly used as a safe-haven asset that retains its purchasing power during tumultuous times. As such, the demand for gold and its price tend to rise during U.S. periods of economic instability, high inflation, and low interest rates.
The economic turmoil and inflationary period of the late 1970s saw a corresponding run-up in the spot price of an ounce of gold: from $176 in January 1978 to $653 in January 1980—an astonishing 271% increase in just a two-year period. Similarly, during the subprime mortgage crisis and ensuing Great Recession, gold prices climbed over 119% from October 2008 to August 2011. And most recently, fears of global economic downturn starting in 2018 portended the COVID-19 pandemic and subsequent inflation, all leading to a nearly 66% run-up of the gold spot price from September 2018 to July 2020.
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Similarly, the results of U.S. presidential elections—and their projected impact on the U.S. and global economies—can influence financial markets and gold prices. Looking at data over the past several presidential election cycles, the spot price of gold was more likely to perform worse following Republican victories than Democratic victories. Since 1980, in the two-week periods following a presidential election, Democratic victories saw an average gold price increase of 0.5% while that same period for Republican victories produced an average price drop of 1.1%. When examining the period between election and inauguration days, the effect is amplified. Democratic presidential election wins led to an average gold price increase of 1.5% while Republican wins brought on an average decrease of 5.5%.
This effect may be attributable to gold buyers associating fiscal conservatism of Republican presidents with lower rates of inflation and a stronger dollar. On the other hand, progressive fiscal policies that favor increased government spending may be perceived by gold buyers to produce higher rates of inflation.
To determine how the price of gold changed after each presidential election, researchers at U.S. Money Reserve calculated the two-week change in the spot price of gold following election day. Researchers also calculated the change between Election Day and Inauguration Day, as well as the four-year change. The four-year change compares the spot price of gold between the days before each presidential election.
Here’s how the price of gold has changed after each presidential election since 1980.
Gold’s Post-Election Price Reactions
11. 1980 Presidential Election
- Gold price change (2-week post-election): -3.4%
- Gold price change (Inauguration Day): -12.3%
- Gold price change (4-year): -46.5%
- Elected President: Ronald Reagan (Republican)
- Runner-up: Jimmy Carter (Democrat)
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10. 1984 Presidential Election
- Gold price change (2-week post-election): +0.1%
- Gold price change (Inauguration Day): -10.3%
- Gold price change (4-year): +23.3%
- Elected President: Ronald Reagan (Republican)
- Runner-up: Walter Mondale (Democrat)
9. 1988 Presidential Election
- Gold price change (2-week post-election): -1.1%
- Gold price change (Inauguration Day): -3.4%
- Gold price change (4-year): -19.5%
- Elected President: George H. W. Bush (Republican)
- Runner-up: Michael Dukakis (Democrat)
8. 1992 Presidential Election
- Gold price change (2-week post-election): -1.3%
- Gold price change (Inauguration Day): -3.0%
- Gold price change (4-year): +11.4%
- Elected President: Bill Clinton (Democrat)
- Runner-up: George H. W. Bush (Republican)
7. 1996 Presidential Election
- Gold price change (2-week post-election): -0.1%
- Gold price change (Inauguration Day): -6.6%
- Gold price change (4-year): -30.0%
- Elected President: Bill Clinton (Democrat)
- Runner-up: Bob Dole (Republican)
6. 2000 Presidential Election
- Gold price change (2-week post-election): +0.3%
- Gold price change (Inauguration Day): -0.1%
- Gold price change (4-year): +61.1%
- Elected president: George W. Bush (Republican)
- Runner-up: Al Gore (Democrat)
5. 2004 Presidential Election
- Gold price change (2-week post-election): +3.0%
- Gold price change (Inauguration Day): -1.0%
- Gold price change (4-year): +69.3%
- Elected president: George W. Bush (Republican)
- Runner-up: John Kerry (Democrat)
4. 2008 Presidential Election
- Gold price change (2-week post-election): +2.1%
- Gold price change (Inauguration Day): +18.5%
- Gold price change (4-year): +133.0%
- Elected President: Barack Obama (Democrat)
- Runner-up: John McCain (Republican)
3. 2012 Presidential Election
- Gold price change (2-week post-election): +2.6%
- Gold price change (Inauguration Day): 0%
- Gold price change (4-year): -23.9%
- Elected President: Barack Obama (Democrat)
- Runner-up: Mitt Romney (Republican)
2. 2016 Presidential Election
- Gold price change (2-week post-election): -5.4%
- Gold price change (Inauguration Day): -5.6%
- Gold price change (4-year): +47.9%
- Elected President: Donald Trump (Republican)
- Runner-up: Hillary Clinton (Democrat)
1. 2020 Presidential Election
- Gold price change (2-week post-election): -0.9%
- Gold price change (Inauguration Day): -1.3%
- Gold price change (4-year): +4.4%
- Elected president: Joe Biden (Democrat)
- Runner-up: Donald Trump (Republican)
Methodology
To determine how the price of gold changed after each presidential election, researchers at U.S. Money Reserve calculated the two-week change in the spot price of an ounce of gold following Election Day. Researchers also calculated the change between Election Day and Inauguration Day, as well as the four-year change. The four-year change compares the spot price of gold between the days before each presidential election.
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