Prices also marked their biggest drop in dollars and percentage terms since June 17, 2021. The Republican Party has gained control of the Senate and appears to be on track to secure a majority in the House of Representatives.
Gold futures fall this Tuesday, with the strength of the US dollar driving the metal’s biggest daily drop in more than three years following Donald Trump’s victory in the US presidential election last week.
With the elections already held, the markets are “undoing the operation of political uncertainty“said Peter Grant, vice president and chief metals strategist at Zaner Metals.
For this Tuesday, gold falls 0.2% to trade at US$2,614 per ounce. These are September lows. However, the day before, gold for delivery in December (GCZ24) fell US$77.10, or 2.9%, to close at US$2,600 per ounce on Comex. This was the lowest close for a most active contract since September 19.
Prices also marked their biggest drop in dollars and percentage since June 17, 2021. The Republican Party has gained control of the Senate and appears on track to secure a majority in the House of Representatives, meaning the administration Trump will likely be able to implement his policy agenda “without significant legislative opposition,” Grant told MarketWatch. “The prospect of lower taxes and less regulation has led to risk flows into stocks to the detriment of safe-haven assets such as gold“.
What is behind the fall of gold
“Gold’s decline against the backdrop of Trump’s victory marks a shift in sentiment, with some investors now choosing to diversify away from safe-haven assets,” said Fawad Razaqzada, market analyst at City Index and Forex.com. However, This is likely only a “temporary hurdle, and the long-term outlook for gold remains bullish in light of continued rate cuts by central banks.”
Donald Trump Thumbs up
As expected last week, the US Federal Reserve cut its benchmark interest rate by a quarter percentage point, to a range of 4.5% to 4.75%. Lower interest rates may be favorable for gold, which does not earn interest returns.
“Once the post-election dust settles,” Grant said, he believes the market will “refocus on geopolitical tensions, concerns about the Chinese and European economies, rising global debt levels, continued buying of gold by central banks, and political uncertainty in Germany and Japan.”
Given all that, he said he remains bullish on gold, although “maybe a little less optimistic” about new all-time highs for the metal’s prices before the end of the year.
Source: Ambito
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