Equity vs Gold vs Bitcoin: Where should you invest amid US elections-led market volatility

The US will make its choice between the Republican Party's Donald Trump or Democratic Party's Kamala Harris as next president. The US elections have already triggered volatility in the global market across all asset classes, but the actual impact would eventually depend on the outcome.

The new US government will also decide the fate of rate cut cycles and geopolitical tensions. However, Indian markets have faced the wrath from overseas investors, who pulled out nearly 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. However, if Republicans assume power (Trump), we expect the resumption of trade wars led by an increase in tariffs, said Nitin Aggarwal, Director of Investment Research & Advisory at Client Associates, a family wealth management firm.

"If interest rate cuts are delayed in the US, then emerging economies like India might witness delay in repo rate cuts as well. Any delay in interest rate cut in India will only widen pressures on the Indian economy, which has recently started witnessing a slowdown in earnings growth," he said.

Stock markets/Equity
It appears the waters may get a bit turbulent for Indian equities in the short term, said Motilal Oswal. "The recent escalation in the Israel-Iran conflict only adds fuel to the fire of the already simmering geopolitical tensions. Uncertainty looms over the outcome of the US elections. The monetary stimulus unleashed by China has sparked a wave of tactical FII outflows from India," it said.

Market participants believe that US elections will impact the global market across all asset classes. There shall be some wild swings in various assets but such short-term jitters should not impact their long-term approach. Investors should focus on creating a diversified portfolio and buy the dips with a long-term investment horizon.

Kranthi Bathini, Director of Equity Strategy at WealthMills Securities suggested investors to continue to remain invested in the equity markets despite the possible knee-jerk reactions over the election outcomes. Equities have been a wealth creator in the long run and investors should use these dips to buy the quality stocks instead of timing the markets as the bottom are unknown.

"Investors should go stock specific in the broader sense without compromising on the quality. However, risk averse investors should stick to largecap names," he said. "Long term investors should have around 80-85 per cent allocation in equity based on their risk appetite. They can allocate 10 per cent in debt, while up to 5 per cent should be allocated to gold."

Gold/Bullion
Analysts tracking the bullions market are not gung-ho on gold as they believe that the yellow metal has seen a sharp upsurge in the last one year and it may see a 10 per cent correction once the volatility is over. They suggest investors book profits if there is near-term upside 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 targeted levels of $2800per ounce and Rs. 80000 have been almost achieved. However, she anticipates short-term volatility as global events unfold. "Gold prices are currently over-stretched, and we may see a correction to the Rs. 73,000-74,000 range per 10 gm in the current quarter as immediate event risks begin to recede, and with funds potentially diverting into Bitcoin and debt markets in the short run." she said.

 

Sachdeva expects gold’s momentum to rebound following this profit-taking phase. "While tactical, short-term investors could still find value in gold, strategic long-term buyers would benefit from waiting for a price correction," she advised. After a brief period of correction, gold could climb further, targeting around $3,000 per ounce and Rs. 84,000 per 10 gm.

Looking forward, geopolitical risks, shifts in US policy post-election, strong central bank buying, significant ETF inflows, rising US debt levels and a low-interest-rate environment in the US are poised to drive demand for gold. It’s safe-haven appeal and role as a portfolio hedge continue to position gold as an attractive investment, and any price dips may offer an opportunity to long term investors to add gold for portfolio diversification and capital protection. These factors could collectively contribute to the rising gold prices in 2025, reflecting a mix of economic, geopolitical, and monetary dynamics that influence investor behavior and market trends.
 

Other experts believe that market participants have adopted a cautious stance, given the significance 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 are also lending support to the safe-haven demand for precious metals.


Gold and silver traded sideways with a slight negative bias amid the most eventful market week of the year. The US Presidential election begins today. In addition, the US Federal Reserve policy meeting and a Chinese stimulus meeting are also scheduled during this time, said Rahul Kalantri, VP Commodities at Mehta Equities.


Bitcoin/Crypto
Digital assets like Bitcoin and other crypto tokens have seen some volatility in the last few sessions. Bitcoin, the largest digital asset, has been trading sub $70,000 levels, while Ethereum is below the $2,500 mark. The total market capitalization of the cryptos fell over 2 per cent slipping to $2.25 trillion mark. However, analysts see institutional inflows in digital asset class post elections.

This US election season has put the spotlight on crypto, with candidates from both parties supporting the growth of the crypto space. With more countries like the UAE and the European Union setting up clearer regulations, crypto is set to become a major asset class for investors, said Edul Patel, Co-founder & CEO at Mudrex.

"Given its globalised nature and its ability to hedge against inflation, digital assets like 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 react to uncertainties," he said.
 

Bathini from Wealthmills does not consider cryptos as an investable asset class. "People make money in speculations but chances of losing money in misadventures is higher," he said.