Parquet: Gold gets cheaper after Trump’s victory, maybe not for long – List of News

After the results of the US presidential election were announced in the markets, stocks and the yield of US government bonds rose, while the price of gold went in the opposite direction, registering a fall of about 3 percent. Currently, gold is holding below the $2,700 mark per ounce, which represents about a hundred dollars back from pre-election highs.

In recent months, political uncertainty and geopolitical tensions have lured investors into the safe havens of gold. However, the markets calmed down after the election, which led to natural profits and price reductions. Lulling after bullish rallies is a common occurrence for markets, but in the long run this does not necessarily mean that gold has lost traction.

A look at the past is also interesting. When Trump was first elected president eight years ago, the price of gold fell about 17 percent in six weeks. In addition, the current cycle in the gold market is extremely “expansion”, as it has shown growth for more than a year without significant changes.

Another factor that briefly dampened gold’s luster was the strengthening dollar and rising US government bond yields. “Expectations of higher growth and inflation have pushed up bond yields and strengthened the dollar, making gold, which offers no yield, less attractive to investors,” said Adam Turnquist, chief pre -technical engineer at LPL Financial.

A stronger dollar pushes the price of gold down because it is more expensive for foreign investors. On the other hand, higher bond yields attract investors to assets with consistent returns – which gold does not provide. So US ten-year bonds hit a four-month high and many investors began to reassess their strategies.

The current easing of political uncertainty in the US may not last forever. The Trump administration’s planned measures (tax increases, budget deficit expansion and tax cuts) could contribute to rising inflation, a key factor that makes gold attractive to many investors. As a result of these expansionary fiscal movements, the case for buying gold may again be made.

So the long-term outlook remains positive for this precious metal. Strategists at JPMorgan expect Trump’s policies to support other assets as well, such as bitcoin, which broke above $80,000 for the first time in history over the weekend.

The world’s central banks are increasingly diversifying their reserves towards gold to reduce their reliance on the US dollar, which could also increase demand for gold next year. The Goldman Sachs bank also has an optimistic view, predicting that the price of gold could reach up to $3,000 per ounce by the end of 2025.

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