What an Obama Win Means for Gold Prices in 2013

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With a U.S. President Barack Obama win in Election 2012, look for gold prices to soar above $2,000 an ounce in 2013.

Prior to the election's results, gold players had been on the sidelines but they jumped back in and took the precious metal back above $1,700 per ounce on Tuesday.

On Wednesday, gold rose to near two-week highs of $1,730 before falling to a steady level of $1,714.50 per ounce for December futures.

"Since Obama was elected in 2008, gold is up 116% and silver us up a whopping 198%," said Money Morning Global Resources Specialist Peter Krauth. "Honestly, I expect a similar performance could well be enjoyed over the next four years."

Here's why.

Why an Obama Win is Bullish for
Gold Prices

Nicolas Berge, a trader at hedge fund Absolute Capital Group, said to Reuters, "If Obama is reelected, that would be a boost for gold because it means continuity on U.S. public spending and Federal Reserve monetary policy."

This also means with President Obama still in office, U.S. Federal Reserve Chairman Ben Bernanke and his easy money policies are likely to stick around. Just yesterday San Francisco Fed President John Williams hinted that the most recent QE3 bond buying program could well exceed $600 billion.

Jeff Sica, president of SICA Wealth Management, said to Investor's Business Daily, "Bernanke will continue to have full reign with the potential of another term in which he can execute his QE to perpetuity. This will continue to weaken the dollar and increase the price of gold. The Obama Administration is firm in their opinion that the economy is improving, so I see little chance of them changing course in the next four years."

But there's more.

Now that the election is behind us, the fiscal cliff is looming, weighing on investors' minds. This will have the potential for spending cuts and tax increases taking effect in January should the White House and Congress fail to find a compromise before then.

Plus there's the $16 trillion U.S. debt problem that Congress has to tackle.

Richard Hastings, a macro strategist at Global Hunter Securities, said to MarketWatch, "We continue to believe that sufficient tension on the U.S. debt ceiling should give gold a solid lift, but some of the opportunity is being reduced because of fundamental weakness in Europe."

On Wednesday, the Economic and Monetary Affairs Commissioner Olli Rehn said the Eurozone economy would grind to almost a halt next year as the region's debt crisis hits Germany and down in Greece, Prime Minister Antonis Samaras coalition is seeking parliamentary approval for its austerity measures.

Peter Grant, chief market analyst at USAGOLD said to MarketWatch, "There has been "lots of "noise' … surrounding the election and the situation in Europe but the underlying fundamentals for gold remain "constructive."

"Tune out the noise and focus on things like the debt and debt ceiling, fiscal cliff, the mess in Europe, central bank demand and there are plenty of reasons to buy gold," said Grant.

Special Report: .

And providing an added short-term boost for gold investors, it is festival season in India which will drive demand for gold and increased prices. Jewelry and coin sales are strong during this time and they are expected to increase 35%, and 45%, respectively, reported Business Standard.

Suresh Hundia, former president of Bombay Bullion Association (BBA) said to Business Standard, "This festive season, we expect good demand for coins, one-kg bars and ETFs, unlike past instances, when jewelry demand shot up during weak gold prices."

For Krauth's full analysis on where gold prices could be by the time President Obama's second term ends, check out this report.

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