Gold Hits 4-Week Low Following Trump’s Election and Rising US Dollar

Gold prices have plummeted to a four-week low following Donald Trump’s election as President, while the US Dollar reached a four-month high. Bitcoin surged to an all-time high, and US stocks gained. Key inflation data is anticipated amidst crucial shifts in monetary policy and legislative changes planned by the new administration.

On Monday, gold prices fell to a four-week low, marking the worst performance in five months as the US Dollar surged, reaching a four-month high in the wake of Donald Trump’s election as President. Following this political shift, Bitcoin achieved an unprecedented peak, with US equities continuing to rise, buoyed by the possibility of a Republican “red sweep” controlling both Congress and the White House.

Spot gold prices declined by 1.8%, reaching $2,636 per ounce, after a previous decline of 1.9% in the last week, the most significant weekly decline since early May. This downturn occurred despite the Federal Reserve’s decision to lower interest rates by 25 basis points to a range of 4.5% to 4.75%.

While US bond markets remained closed for Veterans Day, the Dollar index, which indicates the value of the US dollar compared to other major currencies, soared to its highest point since early July, following President-elect Trump’s victory in key states including Nevada and Arizona. As Bruce Ikemizu of the Japan Bullion Market Association noted, the decline in gold prices is less about Trump’s victory and more about the swift resolution of election uncertainty, which was anticipated to be prolonged.

Conversely, Bitcoin experienced a notable increase of 7.1% last month and further surged by 8.9% in November, reaching over $82,000, propelled by anticipated supportive legislation in a Republican-dominated Congress. Trump had committed to implementing measures favorable to cryptocurrency during his campaign, aiming to diminish regulations and propel the US as the premier destination for cryptocurrencies, contrasting the current government’s stance.

US stock futures signaled further gains as both the S&P 500 and the Dow Jones Industrial Average reported their most substantial weekly percentage increases since early November alongside the Nasdaq, which also attained a new record high. A Barclays strategist articulated expectations for stocks as they anticipate Trump’s growth policies and potential regulatory relief compared to the Biden administration.

For international investors, gold values in GBP and Euros also dipped to four-week lows, dropping beneath £2,050 and €2,480, respectively. In China, the foremost consumer of gold, the Shanghai Gold Exchange recorded prices at ¥614 per gram, albeit still 3.6% lower than its all-time high on Halloween, maintaining a discount compared to London prices.

Meanwhile, oil prices found some stability following decreases related to Beijing’s less-than-expected economic stimulus measures aimed at alleviating local government debt. Recent data indicated ongoing deflationary trends in China’s economy, with the consumer price index shrinking by 0.3% in October, and the producer price index experiencing continual declines for the past 25 months.

Key inflation indicators in the US are set to be released this week, with the consumer price index due on Wednesday and the producer price index on Thursday, both being closely observed ahead of the Federal Reserve’s policy meeting scheduled for December 17-18. Federal Reserve Chair Jerome Powell remarked, “In the near term, the election will have no effect on our policy decisions,” and that the central bank would consider the implications of the new administration’s policies over time on inflation and employment outcomes.

Silver prices also decreased robustly, dropping by 2.0% to $30.67 per ounce, echoing gold’s retreat as it sank to a four-week low after last week’s significant losses. Nicky Shiels, head of metals strategy at MKS Pamp, expressed that the upcoming week may offer a lull in activity compared to recent volatility, suggesting that absent any adverse news, investors may opt to sell gold during price rallies.

The article discusses the recent fluctuations in gold prices, primarily impacting investors in light of Donald Trump’s election as President and subsequent changes in the financial landscape. This period is characterized by a concurrent rise in the value of the US dollar and Bitcoin, as well as positive movements in US equity markets as investors respond to the political shifts and anticipated regulatory changes. Gold prices are analyzed along with related commodities, including silver and oil, contextualizing the global economic conditions and ongoing inflation metrics that influence investor behavior and market confidence.

In conclusion, the recent election of Donald Trump has sparked substantial shifts in financial markets, marked by a four-week low in gold prices and a surge in Bitcoin and US equities. The Fed’s interest rate adjustments and anticipated policy changes further complicate the outlook for commodities. Investors are closely monitoring inflation indicators as they navigate this evolving economic landscape, which remains uncertain yet promising for those aligned with pro-business and pro-crypto policies.

Original Source: www.bullionvault.com