Why a Romney win is bad for gold price If it were down to gold investors to decide the US election, Mitt Romney would walk it. Gold bugs, always worried about potential currency debasement, care more than most about the US government's indebtedness; the Republican party's rhetoric of deficit reduction appeals to them. It is therefore ironic that the single greatest risk to gold at the moment is probably a Romney victory in next Tuesday's presidential elections. "A win by Romney is generally seen by investors as a downside risk for gold," says Joni Teves of UBS. Nobody wants to do anything until the elections are out of the way. History supports the case. As James Steel of HSBC notes, gold's most dramatic rallies - in 1980 and 2011 - have occurred with Democrats in the White House (Jimmy Carter and Barack Obama). And if Mr Romney can succeed in bringing down the deficit, that could lead to a stronger dollar and therefore weaker gold. But the real "Romney risk" for the yellow metal has nothing to do with fiscal policy. Instead, traders and investors are focusing on the likelihood that if Mr Romney wins the November 6 election, he would replace Ben Bernanke with a more hawkish chairman of the Federal Reserve when the latter's term expires in January 2014. If that means a change in direction from the Fed's current experimental and super-accommodative monetary policy, gold could suffer. Recall the sharp sell-offs earlier this year when expectations of quantitative easing were deferred. "From the gold market point of view, the Fed is the significant thing," says one major hedge fund investor in the yellow metal. Likewise, an Obama victory may be the green flag gold bulls have been waiting for. Not only does it suggest a tussle over the forthcoming fiscal cliff with a House of Representatives most likely controlled by the Republicans, but more importantly it removes the threat of a change in monetary policy. Under an Obama presidency, Mr Bernanke is likely to be replaced as Fed chairman with a similarly dovish voice, such as Janet Yellen, the current vice-chair. Some dealers are already anticipating the possibility of an Obama victory with relish. Tobina Kahn, vice-president of House of Kahn, a Chicago-based jewellery group, predicts higher sales "because people are looking to preserve their assets." If Obama gets re-elected gold is going to go through the roof.