CNBC/Patti Domm
If the presidential debate has a clear winner, it could show up in a big market move

If the presidential debate Tuesday results in a clear winner, there could be a much bigger market reaction than there has been following past political debates, analysts said.

President Donald Trump and former Vice President Joe Biden head into the debate with Biden leading. To the market, it is Biden’s to lose, and if he does, some see it potentially weakening his chances in November — a possible positive for the stock market.

Biden has said he would raise taxes on corporations and the rich, as well as increase capital gains taxes. He also is expected to increase regulation. Biden has proposed raising the top tax rate for capital gains for the highest earners to 39.6% from 23.8%, and he would boost the corporate tax rate from 21% to 28%, but also take away some other advantages.

“The market is looking at this in a very binary way,” said Peter Boockvar, chief investment officer at Bleakley Advisory Group. “Putting aside your politics, if you just look at the math of higher capital gains taxes and higher corporate tax rates, one is going to lower your returns and the other is going to lower corporate profits.”

Three reasons why a Biden win could be good for the U.S. economy: Moody’s Zandi

Biden leads Trump by 6.9 percentage points in an average of major polls on RealClearPolitics.com.

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Forbes/Sergei Klebnikov
UBS Tells Clients To Prepare For A Contested Election By Buying Gold

With Election Day just five weeks away, investors are growing increasingly fearful of a contested presidential election—and UBS is the latest Wall Street firm to warn about increased stock market volatility telling clients to buy safe-haven assets like gold.

The looming standoff between President Donald Trump and Democratic nominee Joe Biden could lead to disputed results with no clear winner on Election Day, which would weigh heavily on the stock market, UBS warned clients.

Trump has thrown into question whether he would accept a peaceful transfer of power if he loses;  meanwhile, a rise in mail-in ballots—as the coronavirus keeps many people from voting in person—could also lead to delayed results.

“A contested [election] outcome is still a possibility, which could add to further volatility and result in safe-haven flows,” UBS chief investment officer of global wealth management Mark Haefele told clients in a recent note.

The firm said that because of a “far-from-certain” election outcome, clients should buy gold, a traditional safe-haven asset that tends to perform well during times of economic uncertainty.

Although gold prices fell by more than 4% last week—their worst decline in a month and a half—UBS said that the recent pullback was just a temporary correction and that gold is set to rally higher going into the election.

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Reuters/Eileen Soreng
Gold nudges up as dollar tepid ahead of Trump-Biden debate

Gold prices edged up on Tuesday as the U.S. dollar retreated from a two-month high, with investors looking forward to the first U.S. presidential debate and developments on a new U.S. coronavirus relief bill.

Spot gold rose 0.1% to $1,883.51 per ounce by 0313 GMT. Prices rose 1.1% in the previous session, its biggest one-day gain since late August.

U.S. gold futures were up 0.3% at $1,888.40.

The dollar index was tepid, drifting away from a two-month high of 94.745 reached last week.

A weaker dollar makes gold cheaper for holders of other currencies.

“The dollar’s decline has helped gold as the correlation remains relatively strong,” said Howie Lee, an economist at OCBC Bank, pointing also to prospects of further fiscal stimulus in the United States.

“If that bill gets passed before the November elections, I think that will help risk sentiment. Gold may be pushed higher by virtue of the dollar weakening and heightened inflation expectation.

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Kitco/Anna Golubova
Silver price plunge ‘not terminal’, precious metal already up 2% on the day – StoneX

September’s silver price drop from nearly $30 an ounce to the low $20s “is not terminal,” said StoneX, highlighting silver’s volatile nature.

“Silver has lived up to its usual capricious ways and gone hard into reverse over the past weeks and gold’s reversal, which started early in the month after failure at $2,000 and then extended by the downturn in equities, served to exacerbate silver’s retreat,” said Rhona O’Connell, head of market analysis for EMEA and Asia regions at StoneX.

O’Connell compared silver to Cinderella at a ball. “When she leaves the ball, she usually does so in a flash,” she wrote when describing silver’s reversal. “Over a long period of time, if gold sustains a bull market, then silver will generally gain alongside it, and usually outperform, but in the shorter term, it can be dangerous. A combination of gold on the back foot and a mournful economic outlook is enough for silver to remember that it is an industrial metal and throw a tantrum such as the one we have just seen.”

Over the course of September, silver plunged 19%. Despite the monthly plunge, silver is still one of the best performers, with spot prices trading 31% higher than at the same time last year.

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