Briefing highlights
- The correlation between Trump and gold
- Canada creates 44,000 jobs on part-time rise
- Trade deficit swells to record
Parallels
The metal with a yellow hue tends to rise and fall with the political fortunes of the presidential contender with an orange hue.
You could say that Mr. Trump appears to have the Midas touch. But for the fact that gold rises along with Mr. Trump’s showing in the polls and declines as his chances wane.
Given that gold is a haven asset, this is a sign of investors seeking shelter from what is expected to be the storm that would follow a Trump presidency.
Analysts believe the uncertainty surrounding a Trump victory next week would spark at least a knee-jerk unfriendly reaction across financial markets.
“We have mentioned several times … that the U.S. election cycle is indeed a binary risk to gold,” Helima Croft, Royal Bank of Canada’s head of commodity strategy in New York, and her colleagues Michael Tran and Christopher Louney, said in a report.
“To reiterate, we observed peak-and-trough matching between gold prices and Trump’s chances of winning the 2016 U.S. presidential election,” they added.
“In short, when his chances rise above 40 per cent, gold tends to peak, and when his chances fall below 20 per cent, gold tends to trough.”
Gold has been on the rise of late, the RBC strategists said, at least partly because Mr. Trump is seen to have a better than 20-per-cent chance of defeating Hillary Clinton in Tuesday’s election.
And it’s not just gold.
“The market continues to find solace … in the JPY, CHF and gold, and these seem to be the places to hide and ride out the U.S. election,” said IG’s chief market strategist Chris Weston, referring to the Japanese yen and Swiss franc by their currency symbols.
So what might one expect over the next few days?
“Gold’s value as a hedge should be firmly in place up until the results of the … election, and quite likely past it,” CMC Markets analyst Jasper Lawler said.
“The initial relief of a Hillary Clinton victory would likely be gold negative,” he added, though the possibility of an “impeachment-generating scandal from her e-mails will be the kind of destabilizing force that is beneficial to safe havens.”
Unemployment sticks at 7 per cent
Canada’s economy churned out 44,000 new jobs last month, but you’ve got to look at the details to get the full story.
The country lost 23,000 full-time positions and gained 67,000 part-time jobs, according to Statistics Canada, while unemployment held stubbornly to the 7-per-cent mark.
And look at the past year: Employment is up by 140,000, or 0.8 per cent, primarily because of part-time work, The Globe and Mail’s Rachelle Younglai reports.
Trade deficit swells
Canada now has a record trade deficit of a whopping $4.1-billion.
Imports rose in September by 4.7 per cent, outpacing a 0.1-per-cent rise in exports, Statistics Canada said.