The United States will choose between Donald Trump of the Republican Party or Kamala Harris of the Democratic Party as the next president. The US elections have already triggered volatility across all asset classes in the global market, but the real impact will ultimately depend on the outcome.

The new US government will also determine the fate of interest rate cut cycles and geopolitical tensions. But Indian markets have faced ire from overseas investors, who have withdrawn around Rs 1.14 lakh crore in October 2024, making India the worst-performing markets in the world after Russia.

If the Democrats return to power, the impact on the global economy, including India, is expected to be minimal as the status quo will continue. But if Republicans come to power (Trump), we expect a resumption of trade wars sparked by the increase in tariffs, said Nitin Aggarwal, director of investment research and advisory at Client Associates, a family wealth management firm.

“If interest rate cuts in the USA are postponed, developing economies such as India may also experience a delay in repo rate cuts. Any delay in interest rate cuts in India will only increase the pressure on the Indian economy, which has started to slow down recently.” in earnings growth,” he said.

Stock Exchanges/Stocks
Motilal Oswal said that waters may be a bit turbulent in Indian stocks in the short term. “The recent escalation in the Israel-Iran conflict further fuels the fire of already simmering geopolitical tensions. Uncertainty over the outcome of the US elections looms on the horizon. The monetary stimulus unleashed by China has led to a tactical wave of FII exits from India,” he said.

Market participants believe that the US elections will impact the global market across all asset classes. There will be some sharp fluctuations in various assets, but such short-term fluctuations should not affect long-term approaches. Investors should focus on building a diversified portfolio and buy dips with a long-term investment horizon.

Kranthi Bathini, Director of Equity Strategy at WealthMills Securities, suggested investors continue investing in the equity markets despite possible immediate reactions to the election results. Stocks have been a wealth creator over the long term, and investors should use these dips to buy quality stocks rather than timing the markets because the bottom is unknown.

“Investors should be more specific to the stock in a broader sense, without sacrificing quality. However, risk-averse investors should stick to large-cap names,” he said. “Long-term investors should have an equity allocation of around 80-85 percent, depending on their risk appetite. They should allocate 10 percent to debt and up to 5 percent to gold.”

Gold/Bullion
Analysts who follow the bullion market are not very positive about gold, as they think that the yellow metal has experienced a sharp rise in the last year and may see a 10 percent correction when the volatility ends. They recommend that investors book profits in case of a short-term rise and re-enter gold at lower levels.

According to Sugandha Sachdeva, Founder of SS WealthStreet, gold prices may see a limited upside in the near term as it targets $2800 per ounce and Rs. 80000 almost reached. But he predicts there will be short-term fluctuations as global events unfold. “Gold prices are currently overstretched and we may see a correction to the range of Rs 73,000-74,000 per 10 grams this quarter as emergency event risks start to fade and funds potentially move towards Bitcoin and debt markets in the short term.” he said.

Sachdeva expects gold’s momentum to recover after this profit-taking phase. “Tactical, short-term investors may still find value in gold, while long-term strategic buyers may benefit from waiting for a price correction,” he advised. After a brief correction period, gold may rise further and target $3,000 per ounce and Rs. 84,000 per 10 grams.

Looking ahead, geopolitical risks, post-election changes in US policy, strong central bank purchases, significant ETF inflows, rising US debt levels and the low interest rate environment in the US are poised to increase demand for gold. Its safe-haven appeal and portfolio hedging role continues to position gold as an attractive investment, and any price decline could present long-term investors with the opportunity to add gold for portfolio diversification and capital protection. These factors may collectively contribute to higher gold prices in 2025, reflecting a mix of economic, geopolitical and monetary dynamics that influence investor behavior and market trends.

Other experts think that market participants are taking a cautious stance, given the importance of these events. Gold and silver are witnessing profit-taking at higher levels as US 10-year bond yields remain elevated. Volatile global equity markets also support safe-haven demand for precious metals.

Gold and silver traded sideways with a slight negative bias during the busiest market week of the year. US Presidential elections start today. Mehta Equities Vice President of Commodities Rahul Kalantri also said that the US Federal Reserve policy meeting and China incentive meeting are also planned during this period.

Bitcoin/Crypto
Digital assets such as Bitcoin and other crypto tokens have seen some volatility over the last few sessions. Bitcoin, the largest digital asset, is trading below $70,000, while Ethereum is trading below $2,500. The total market value of cryptocurrencies dropped by over 2 percent to $2.25 trillion. However, analysts are seeing institutional entries into the digital asset class after the elections.

This US election season has brought attention to crypto, with candidates from both parties supporting the growth of the crypto space. Edul Patel, Co-Founder and CEO of Mudrex, said crypto will become an important asset class for investors as more countries such as the UAE and the European Union create clearer regulations.

“Given its globalized nature and ability to hedge against inflation, digital assets such as Bitcoin, Ethereum, and others provide diversification to one’s portfolio. In times of geopolitical tension, crypto serves as a resilient alternative investment, similar to gold, maintaining stability while traditional markets remain afloat,” he said. .

Wealthmills’ Bathini does not see cryptocurrencies as an investable asset class. “People make money from speculation, but they are more likely to lose money in misfortunes,” he said.