New Gold Price Prediction Following the Election

gold price predictionMoney Morning Resource Specialist Peter Krauth just revealed his new bullish 2016 gold price prediction for after the U.S. presidential election. In it, he describes how gold should outperform the markets over the next month.

And the election isn't the only reason he's bullish on gold...

Krauth says there's another major event that should send gold prices higher in his 2016 gold price prediction.

Before we get to that, here's why gold prices have been volatile ahead of the election...

Gold Price Volatility Continues in 2016

On Oct. 28, FBI Director James Comey announced the FBI discovered new emails in the Hillary Clinton email scandal.

The new emails were found because of an investigation of Anthony Weiner, a former congressman accused of sending illicit messages to a minor. Weiner's wife, Huma Abdein, who is a top Clinton aide, used Weiner's laptop to send messages to Clinton.

According to USA Today historical poll averages, 45% of voters were voting for Clinton as of Oct. 27, compared to 40.4% for Donald Trump.

However, the race got much closer because of the new email investigation. On Nov. 3, 45% of voters still favored Clinton, but 43% were voting for Trump.

Because many investors had been expecting a Clinton presidency, the news created volatility in the stock market. That volatility helped gold prices climb.

You see, gold is viewed as a safe-haven investment during times of uncertainty.

Before the FBI announcement, an ounce of gold was trading for $1,275 on Oct. 27. By Nov. 2, gold prices climbed all the way to $1,304.

That's a climb of 2.2% in under a week.

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In comparison, the Dow Jones Industrial Average dropped 1.19% during the same time.

The other reason Krauth says gold prices have been volatile is the Brexit.

On Nov. 3, the UK High Court announced Britain could not leave the European Union (EU) without a ratifying vote from parliament.

The potential negative consequences of leaving the EU were bullish for gold prices because they created uncertainty.

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But because this puts doubts on whether or not Britain will actually leave the EU, investing in gold became less appealing.

Gold prices have dropped 1.6% since Friday. But no matter who wins, this is the catalyst for gold prices investors should be watching in Krauth's gold price prediction...

Our Gold Price Prediction After the U.S. Presidential Election

HSBC Bank, one of the world's largest banking and financial services organizations, projects gold will trade for $1,400 an ounce by the end of 2016 if Clinton wins.

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If Trump wins, HSBC Bank believes gold could trade for $1,500 an ounce.

But no matter who wins the election, Krauth believes there is one major event in December that could cause gold prices to climb.

After the election, Krauth says the main narrative driving gold prices moving forward will be the strength of the U.S. dollar and the December FOMC meeting.

"Once the election is over, gold could lose some safe-haven appeal," Krauth said.

"From there, I think the focus on the next rate hike likely for mid-December should keep boosting the dollar and keep weighing on gold."

The markets believe there's a 76.3% chance the Fed will raise rates in December, according to CME Group's FedWatch Tool. That will create uncertainty and test the strength of the U.S. economy. And Krauth says uncertainty is a "boon to gold prices."

The Dow dropped 10% in six weeks after the Fed raised rates in December 2015. Similar short-term volatility this December could help gold prices climb by the end of 2016.

Krauth believes gold prices could now reach his $1,400 year-end price target. From today's price of $1,281, that's a potential profit of 9% for gold investors before the start of 2017.

gold price prediction 2016

The Bottom Line: Gold prices have been volatile because of the election and the Brexit, but our gold price prediction shows prices climbing by the end of 2016. After the election is over and the December FOMC meeting comes into focus, Krauth believes short-term volatility caused by raising rates can help gold prices climb to $1,400 per ounce.

Up Next: Our Newest Gold Price Prediction Indicates Triple-Digit Returns by 2020

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