What Happens to Gold ETFs if This Happens on Election Day

The SPDR Gold Shares (NYSEArca: GLD), iShares Gold Trust (NYSEArca: IAU) and ETFS Physical Swiss Gold Shares (NYSEArca: SGOL) have been plagued recently by the strengthening U.S. dollar and ongoing speculation that the Federal Reserve will raise interest rates in December.

With Election Day drawing near, there is some hope for a near-term rally in gold and the related exchange traded products, but recent polls suggest that hope is faint. Said differently, many gold market observers are bullish on the yellow metal should Republican nominee Donald Trump emerge victorious.

Unfortunately for gold bugs, polls show Democratic nominee Hillary Clinton widening her lead over her Republican rival.

Investors have flocked to U.S. Treasuries and bond-related exchange traded funds in a world of negative-yielding sovereign debt. However, with U.S. Treasury yields hovering around three-decade lows, government debt looks pricey and fixed-income investors are now exposed to greater risks.

Related: Demand Supports Gold ETFs

Interestingly, safe-haven Treasuries are also seen as vulnerable to a Trump victory, along with stocks, leaving gold as potentially the last asset class that could immediately benefit from a Trump win.

Investment in gold jumped to 448 metric tons in the second quarter, or more than double the figure of the same period year-over-year, largely due to a year-over-year increase in ETF investment to 236.8 metric tons, compared to a 23 metric ton outflow the year prior.