- Gold price plunged below $2,655 per ounce on Wednesday, retreating from a 30-October record high of $2,758 per ounce as Donald Trump’s victory in the US presidential election boosted the dollar and prompted investors to unload safe-haven positions in gold.
- The presidential race was less competitive than expected, and its outcome is not expected to be contested.
- Financial markets have also priced in the backdrop of higher US interest rates by the Federal Reserve, which has limited demand for gold bullion rather than interest-bearing assets.
The Republican candidate campaigned on raising tariffs and providing tax cuts, thereby supporting expectations of rising deficits and inflation. At the same time, the Federal Reserve is expected to cut US interest rates by 25 basis points today and is expected to provide insights into balancing the risks of ongoing inflation with a weakening Labor market.
US 10-Year Treasury Yields Rise After Trump Win
According to trading, the yield on the US 10-year Treasury note rose about 15 basis points to more than 4.4% on Wednesday, reaching a four-month high after Trump declared victory in the US presidential election. Trump has won more than 270 electoral votes, with results showing he won some key swing states, including Pennsylvania. A Trump presidency is expected to boost economic growth, by increasing fiscal spending, cutting taxes and keeping interest rates high to control inflation. Also, market participants are closely watching the balance of power in Congress, as the outcome could have major implications for future spending and tax policy. Furthermore, expectations of increased government spending and a heavier debt burden in Washington have already helped push bond yields higher. On the monetary policy front, the Federal Reserve is widely expected to announce a more cautious 25 basis point interest rate cut on Thursday. According to gold trading platforms, gold prices fell 2% overnight after Donald Trump won the US presidency in an election victory that swept the country with greater support than his victory in 2016. At the same time, the US dollar rose by the most since 2020, and this was the first drop for gold below $2,700 per ounce in two and a half weeks.
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What is expected for gold prices under Trump?
In this regard, Colin Hamilton, director of commodities research at BMO, said in a note: "We see gold likely to be a source of portfolio rotation funding in the near term, but as de-dollarization of trade is set to accelerate, we still see support from emerging markets over the coming years." The analyst added that while Trump's proposed policy of raising tariffs to discourage imports could be initially offset by expected Chinese economic stimulus, an impending global trade war would disrupt commodity markets.
He added, "We expect some renewed interest in bulk commodities until the end of the year due to expectations of a stronger Chinese fiscal package to offset any impact from higher tariffs." Ended, "bilateral tariffs between the United States and China are already priced in, but a multilateral trade war that drags in Europe and major Asian economies is not." Therefore, "we see tariffs as a headwind to demand forecasts across many industrial metals through the first half of 2025."
Gold Price Analysis and Forecast Today:
According to today’s gold analysts’ forecast, there has been a shift in the overall trend for gold. As we have often mentioned before, the $2,660, $2,630 and $2,585 support levels respectively will represent a strong reversal of the overall trend to the downside. The price will remain in suspense as if Trump resolves the tensions in the Middle East quickly. Also, bears may find an opportunity to move gold prices further to stronger downside levels. If global geopolitical tensions persist and the euphoria over Trump’s victory subsides, there could be a rebound in gold prices. The first stop is the $2,700 per ounce peak again.
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