Steelmaking raw materials stand to benefit if Republican candidate Mitt Romney wins next week’s U.S. election, while a victory for President Barack Obama would aid gold, Alfa Bank said.
Romney may cut spending and keep taxes flat if elected, resulting in faster growth and a stronger dollar, the Moscow- based lender said in a report dated yesterday. Obama is more likely to raise taxes and continue monetary easing, weakening the dollar, the report showed. Bullion and the U.S. currency tend to move inversely.
“An Obama win favors precious above the other metals because of probable weak growth and ongoing quantitative easing,” Barry Ehrlich, an analyst at Alfa, said in the report. “A Romney win, on the other hand, favors the steel complex because of likely higher economic growth that is likely to aid the housing market and other investment activity.”
A Washington Post/ABC News national tracking poll released yesterday showed the opponents tied at 49 percent among likely voters, based on interviews conducted Oct. 27-30.
The Federal Reserve announced a third round of debt-buying in September as central banks around the world unveiled stimulus measures aimed at boosting economic growth. Gold rose 70 percent as the Fed bought $2.3 trillion of debt in two rounds of purchases from December 2008 through June 2011.
Slowing growth in the U.S. if Obama is re-elected might force China to introduce stimulus measures next summer, Ehrlich said. The Asian nation is the world’s biggest steelmaker and consumer of iron ore, a raw material for producing the alloy.
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