Success of Moderates in French Election Reduces Gold Prices
The first round of the French federal elections concluded with a moderate candidate leading the pack, reassuring investors that the right-wing populist National Front party is unlikely to win the second round. Gold prices have fallen as a result.
En Marche! party candidate Emmanuel Macron emerged victorious on Sunday in the first round of the French election, gaining 24.01% of the vote. Marine Le Pen of the anti-euro National Front followed soon behind, with 21.3% of the vote. (Source: “French presidential election: first round results in charts and maps,” The Guardian, April 24, 2017.)
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While the numbers showed a rather close call between Le Pen and Macron, investors were reassured by the polling numbers of voters, a large portion of whom said they would vote for Macron in the second round, over the much more divisive Le Pen.
The two candidates will meet again in a runoff election on May 7.
Macron is seen as a centrist and a pro-euro candidate. Le Pen, conversely, has much more radical views on topics like immigration, Islam, and the European Union (EU).
A Le Pen victory would bring further uncertainty as to the future of the single market in Europe, and therefore would have investors flocking toward gold as a safety asset, should Le Pen’s campaign gain steam.
Poll numbers have Macron coming away with over 60% of the vote in the next round, although—as we saw in the November 2016 American presidential election—poll numbers can be deceiving.
If, however, Macron is able to pull away with a victory, expect a further dip in gold prices. Should Le Pen make a surprise comeback and win the election, investors will likely flock to the precious commodity in droves.
The French election is the latest politically charged event to fuel demand for gold, with the North Korea vs. United States tension, the Syrian civil war, and various other geopolitical conflicts across the globe further contributing to the demand for gold.
