GRONINGEN (MINEWEB) -

Gold is likely to move sharply upwards should Barack Obama be given a second term in office, analysts say.

In its latest Precious Metals Daily note, UBS writes that an Obama win would be the best case scenario for gold both from a monetary and fiscal policy standpoint.

"In the case of an Obama re-election, we expect gold initially to rally back to where prices had been consolidating before the October non-farm payolls (NFP), so around $1725 before a broader move higher emerges," the bank writes.

According to UBS, the expectation that an Obama win would translate into a continuation of a divided government, "implies that a resolution on the fiscal cliff and the country's debt ceiling are likely going to take some time, with much political wrangling. The uncertainty surrounding negotiations arising from the political gridlock should have a positive impact on gold."

It adds that, President Obama's support of Chairman Bernanke and the Fed's QE policies means that it is more likely than not that a highly accommodative policy environment would be in place for some time.

HSBC's James Steel writes that HSBC fixed income research expects that a Romney victory in the presidential race could push interest rates up and that an Obama re-election could lower them.

And, as he points out, "Lower interest rates historically have helped gold prices and higher rates have been gold-negative.

But, he adds, while the is likely to be a short term bump one way or the other, depending on the election result, the country's problems extend well beyond the elections.

Obama vs Romney

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