An employee handles one kilogram of gold bars at the YLG Bullion International Co. headquarters in Bangkok, Thailand, Friday, December 22, 2023.
Chalinee Thirasupa | Free Mp3 Download Bloomberg | Getty Images
Gold prices extended losses on Thursday to a nearly two-month low as risk appetite surged and the dollar continued to strengthen after Donald Trump won the election last week.
spot price Gold prices have fallen nearly 7% since last week’s election results to $2,559.2 an ounce. Gold futures on the New York Mercantile Exchange were trading at $2,567.3.
The latest slide – gold prices have fallen in six of seven sessions since Trump’s victory – comes after a series of record-breaking milestones for gold over the past year.
“The bull market in gold and silver is on hold and this is likely to continue for a few weeks or so,” said Maximilian Leighton, Citi’s global head of commodities research.
He elaborated that gold prices could move lower as U.S. stocks rise On the prospect of lower taxes and regulations. After Trump returns to the White House, Driven U.S. stocks to record highs Although this rally Take a breath.
Post-election risk sentiment also boosted cryptocurrencies, Bitcoin briefly traded above $93,000 For the first time on Wednesday, Trump is expected to deliver on a range of commitments to the industry.
“Trump looks like he’s going to do a red sweep and increase deregulation and lower the tax environment, causing money to flow into stocks, money to flow into Bitcoin, money to flow out of gold,” Layton told CNBC.
The U.S. dollar index also climbed to a one-year high, making dollar-denominated gold expensive for holders of other currencies.
“The dollar’s gains reflect how markets are pricing in Trump’s inflationary policy agenda, which mainly includes tax cuts and tariffs,” Commonwealth Bank of Australia’s Vivek Dar wrote in a note on Wednesday.
Nicky Shiels, head of metals strategy at stampede service MKS Pamp, said stocks are now in “optimistic territory” as they reflect market-friendly election results. “Before the Trump trade honeymoon phase ends, gold and silver are re-pricing towards a less bullish trajectory,” she said.
Despite the decline in gold prices, market observers remain optimistic about gold price fundamentals.
Leighton said the underlying drivers of the gold market remain in place. Since Trump’s election, speculation has grown about his tariff proposals and their potential impact on the global economy.
“When that happens, people will buy gold and silver to hedge against those downside risks,” Leighton said.
In addition, financial services firm Canaccord Genuity said it expects central bank demand for gold to remain strong, if not grow, due to the U.S. fiscal outlook and heightened geopolitical tensions. Central bank purchases hit record Gold production in the first half of 2024.
“If President-elect Trump’s second term is as confrontational toward friends and foes as his first, we believe the international community will be more vulnerable to demand for national debt relative to its need for national debt,” the bank’s analysts wrote. Demand for gold as a reserve asset is likely to remain strong.
Canaccord Genuity said factors such as rising debt, geopolitical tensions and central bank demand are expected to support higher gold prices.
