The 2024 U.S. election is approaching. How is it different from previous ones?

The 2024 U.S. election kicked off with the Republican Iowa Caucus. This year’s election has garnered more global attention compared to previous ones, mainly for two reasons: first, the decades-long struggle between the two major parties over economic structure and wealth distribution is reaching a climax, and second, there is a significant increase in the possibility of a change in U.S. party leadership, leading to a surge in policy uncertainty.

Although conventional wisdom suggests that elections, even if chaotic, do not have a significant impact on the market, this time is expected to be different. The recent two elections have already left a mark on the market, such as the November market trends in the U.S. stock market.

In the November following the 2016 and 2020 elections, the U.S. stock market rose by 4% and 11%, respectively. This was the first time since the 1980 election that such increases occurred in November. Even after experiencing the November gains, the U.S. stock market recorded a further increase of over 10% in the subsequent three months. Similar patterns can be observed in these two instances, as shown in the following two graphs.

Surge in Gold Prices


In the 2016 and 2020 elections, gold experienced a significant surge, with respective maximum increases of 30% and 44%, far exceeding non-election years. Even when looking at the entire year, the gains in gold were quite substantial. In 2020, the gold yield reached an impressive 25%, leading among major asset classes and surpassing the 18% increase in U.S. stocks during the same period.

The primary reason for the current rise in gold prices is the market’s anticipation of a shift in the monetary policy of the Federal Reserve (FED), expecting a decline in long-term interest rates in the United States. On December 13th of last year, Federal Reserve Chair Powell explicitly stated, during a press conference following the FED interest rate meeting, that the discussion revolved around the timing of a rate cut rather than the initiation of a new round of rate hikes. Currently, long-term interest rates in the United States hover around the 4.6% range.

In 2024, the scenario of gold prices remaining stable at high levels, based on the assumption of a U.S. interest rate cut, is attracting considerable attention. According to forecasts from UBS (UBS Group), by the end of 2024, the price of gold is expected to rise to $2250 per ounce. Goldman Sachs, a prominent U.S. bank, also predicts a target of $2175 within the next 12 months.

The primary factor behind this surge is perceived political risks in the United States. With the upcoming U.S. presidential election scheduled for November 2024, if Donald Trump were to be elected president, there would be a clear emphasis on American nationalism. Apart from potentially worsening U.S.-China relations, the United States might reduce military support to Ukraine and the Middle East. The resonance of the risk associated with the shift in monetary policy and the potential instability caused by the “Trump re-elected as president” scenario could be a major driving force pushing gold prices higher.

The worsening fiscal situation in the United States is also contributing to this trend. The public debt of the U.S. federal government has further increased, surpassing $33 trillion. Investors’ awareness of the detrimental effects of rising interest rates and the risk of a downgrade in the U.S. sovereign debt rating has not diminished. A decline in the credibility of the U.S. dollar is expected to encourage capital flow towards gold.

Elections have a significant and unique impact on asset prices, but they are not always straightforward. The outcomes and their consequences are often unpredictable. For example, in 2016, Hillary Clinton had 50% support against Trump’s 42%, but Trump ultimately won the election with 306 electoral votes to Clinton’s 232. In 2020, despite Joe Biden’s successful election, Trump refused to acknowledge the results in an unprecedented situation of not conceding defeat. With the upcoming presidential election, attention should also be focused on the presidential candidates.

Assuming no unexpected developments, the upcoming presidential election is likely to see a rematch between Biden and Trump. Biden and former President Trump remain the favorites within their respective camps; both enjoy a significant lead in support within their parties, while other candidates lag far behind.

Considering the likelihood of the final face-off, unless Biden faces health issues or experiences a significant drop in support, Democrats are likely to continue endorsing him. On the Republican side, unless other candidates gain traction, abandoning Trump and causing him to run as a third-party candidate could diminish the GOP’s chances of winning—an outcome that the Republican Party is likely to find undesirable.

Next, what conditions are required to win the election? Giving a definitive judgment at this point, with a considerable amount of time remaining until the November election, might be premature. Historically, unforeseen events and breaking news just before elections have often had a direct impact on voters’ perspectives and election results.

However, based on economic and geopolitical considerations, one can speculate on the scenarios in which each side has a higher probability of winning: if the economy experiences a soft landing and conflicts such as Russia-Ukraine or Israel-Palestine are swiftly resolved or yield significant results before the election, Biden’s chances of winning are greater. On the other hand, if the economy enters a recession and geopolitical issues become entangled, drawing global criticism, this could enhance Trump’s chances.

Finally, what are the potential outcomes after winning? From a domestic perspective in the United States, the victory of either side is likely to benefit the domestic economy. Historically, although Trump and Biden have different emphases on domestic issues, both have pursued relatively positive fiscal policies to stimulate the domestic economy.

From the perspective of U.S. foreign policy, if Biden is re-elected, his strategy of maintaining alliances and mobilizing like-minded nations will likely continue. This involves leveraging existing alliances, rallying nations with similar values, and excluding competitors like China and Russia to foster deeper cooperation. On the other hand, if Trump returns to office, he may re-emphasize a departure from globalism, strengthen the “America First” policy, and focus on nationalist foreign policy goals. In such a scenario, Trump may seek to reduce dependence on and cooperation with China in a more aggressive manner.

Therefore, in terms of the election process, attention should be focused on the final nominations of the two parties in July and August, as well as the presidential election in November. After the confirmation of the final nominees, the “prelude” to the final election is the September debates, with the results announced in November. The presidential candidates start making statements, engaging in debates, and answering questions from moderators and voters based on specific themes from September onwards. Debate topics typically cover various policy areas such as the economy, foreign policy, national security, healthcare, climate change, and more. The themes are predetermined by the organizers and generally represent the issues most important to voters. Finally, voters will cast their ballots on November 5th to elect the next president.

It is crucial to pay attention to the situation in swing states in the future. Swing states are considered the “key” to winning the U.S. presidential election. If these critical swing states remain in Biden’s hands, the probability of him defeating Trump will increase. Conversely, if Trump gains a lead in these crucial swing states, his chances of returning to office will be higher, and market volatility is likely to rise further.