Stocks vs Gold vs Bitcoin: Where you should invest amid market volatility led by the US election

The US will choose between Donald Trump of the Republican Party or Kamala Harris of the Democratic Party as the next president. The US election has already sparked global market volatility across all asset classes, but the real impact would ultimately depend on the outcome.

The new US government will also decide the fate of rate cut cycles and geopolitical tensions. However, Indian markets faced the wrath of overseas investors who pulled out nearly Rs 1.14 crore in October 2024, making India the world’s worst performing markets 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. However, if the Republicans take power (Trump), we expect a resumption of trade wars led by an increase in tariffs, said Nitin Aggarwal, director of research and investment advisory at Client Associates, a family wealth management firm.

“If interest rate cuts are delayed in the US, then emerging economies like India could witness delays in reducing repo rates. Any delay in the interest rate cut in India will only add to the pressure on the Indian economy, which has recently started witnessing a slowdown. in increasing earnings,” he said.

Scholarships/Shares
It looks like the waters could get a little choppy for Indian stocks in the near term, Motilal Oswal said. “The recent escalation in the Israel-Iran conflict only adds fuel to the fire of already hot geopolitical tensions. Uncertainty hangs over the outcome of the US election. China’s triggered monetary stimulus has triggered a wave of tactical FII exits from India,” it said .

Market participants believe the US election will have an impact on the global market across all asset classes. There will be some wild swings in various assets, but such short-term jitters should not affect their long-term approach. 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 to continue to stay invested in the equity markets despite the possible choppy reactions to the election results. Stocks have been a long-term wealth creator and investors should use these dips to buy quality stocks instead of timing the markets because the bottom is unknown.

“Investors should deal with specific stocks in the broad sense without compromising on quality. However, risk-averse investors should stick to large-cap names,” he said. “Long-term investors should have around 80-85% allocation in equities depending on their risk appetite. They can allocate 10% to debt, while up to 5% should be allocated to gold.”

Gold/Leagues
Analysts following the bullion market are not bullish on gold, as they believe the yellow metal has seen a sharp rise over the past year and could see a 10% correction once the volatility ends. They suggest investors take profits if there is a near-term rally and re-enter gold at lower levels.

According to Sugandha Sachdeva, founder of SS WealthStreet, gold prices may see limited upside in the near term as her target levels of $2800 per ounce and Rs. 80000 was almost reached. However, she anticipates near-term volatility as global events unfold. “Gold prices are currently overstretched and we may see a correction to the Rs 73,000-74,000 range. per 10 grams in the current quarter as immediate event risks begin to recede and funds can be diverted to Bitcoin and debt markets in the near term.” she said.

Sachdeva expects gold’s momentum to bounce back after this profit-taking phase. “While tactical, short-term investors may still find value in gold, long-term strategic buyers would benefit from waiting for a price correction,” she advised. After a brief period of correction, gold could go higher, targeting around $3,000 per ounce and Rs. 84,000 per 10 grams.

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

Other experts believe that market participants have adopted a cautious attitude, given the importance of these events. Gold and silver are posting gains at higher levels as US 10-year Treasury yields remain high. Volatile global equity markets are also supporting safe-haven demand for precious metals.

Gold and silver traded sideways with a slight downside bias amid the busiest market week of the year. The US presidential election begins today. In addition, the US Federal Reserve’s policy meeting and a Chinese stimulus meeting are also scheduled for this period, said Rahul Kalantri, VP Commodities at Mehta Equities.

Bitcoin/Crypto
Digital assets like Bitcoin and other crypto tokens have seen some volatility over the past few sessions. Bitcoin, the largest digital asset, has traded below $70,000, while Ethereum is below the $2,500 mark. Total crypto market capitalization fell more than 2%, sliding to $2.25 trillion. However, analysts see institutional flows into the digital asset class after the election.

This US election season has put the spotlight on crypto, with candidates from both parties championing the growth of the crypto space. With more countries like the United Arab Emirates and the European Union establishing clearer regulations, crypto will become a major asset class for investors, said Edul Patel, co-founder and CEO at Mudrex.

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

Bathini of Wealthmills does not consider cryptos as an investable asset class. “People make money from speculation, but the chances of losing money in misfortunes are greater,” he said.