Gold Prices Retreat After Trump’s Election Win
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Teh price of gold took a dip on Friday,December 27th,following the news of donald Trump’s election victory. This decline, observed in both spot gold adn US gold futures, is attributed to several factors, primarily the rise in US goverment bond yields. Higher yields make non-interest-bearing assets like gold less attractive to investors, particularly during the typically slower trading periods of the holiday season. the market is now closely watching Trump’s potential economic policies and their impact on the Federal Reserve‘s outlook for 2025.
Spot gold prices fell 0.7% to $2,615.99 per ounce, while US gold futures dropped 0.8% to $2,633.50. This downward trend is further fueled by a strengthening US dollar index, which is now in its fourth consecutive week of gains. A stronger dollar makes gold less appealing to international investors holding other currencies.
“Rate of return on government bonds is slightly higher, and gold will remain under pressure through the end of today… We are in a volatile holiday market,” explained Bob Haberkorn, senior market strategist at RJO Futures. This quote highlights the immediate market reaction and the uncertainty surrounding the holiday trading period.
Despite the recent decline, gold has seen a remarkable surge this year, climbing 28% to reach a record high of $2,790.15 on October 31st. This rally was largely driven by the Federal Reserve’s easing interest rate cycle and escalating global tensions. However, with Trump’s return to the White House, many anticipate a shift in economic policy.
While some analysts predict fewer interest rate cuts from the federal Reserve in 2025, many remain optimistic about gold’s long-term prospects. Continued geopolitical instability, ongoing purchases of gold by central banks worldwide, and the uncertainty surrounding Trump’s potential trade policies are all expected to influence the market. The market anticipates that Trump’s policies on tariffs and trade barriers could reignite trade wars, increasing the demand for gold as a safe-haven asset.
Haberkorn further commented, “Next year, if the central bank buys, I expect the price of gold to hit $3,000 at some point. It might be summer if gold continues to surge at this level.” This prediction underscores the potential for meaningful price increases in the coming year, contingent on various economic and political factors.
Beyond gold, other precious metals also experienced declines. Silver fell 1.6% to $29.32 per ounce, platinum dropped 2.2% to $915.20, and palladium decreased by 1.3% to $912.99.The overall market volatility underscores the interconnectedness of these precious metals and their sensitivity to broader economic trends.
Gold Prices Dip Following Trump’s Election Victory
After Donald Trump’s victory in the recent election, the price of gold saw a noticeable decline on December 27th. Factors like rising U.S. goverment bond yields and a strengthening dollar influenced this downward trend. Investors are closely watching Trump’s potential economic policies and their impact on the Federal Reserve’s outlook for 2025.
A Look at the Recent Gold Market Downturn
Sarah Jensen, Senior Editor at world-today-news.com: Welcome, Dr. Smith.
We’ve seen quite a bit of movement in the gold market following the election. Can you help our readers understand what’s driving these changes?
Dr. david Smith, Chief Economist at Global asset Advisors: Sarah, thanks for having me. The recent dip in gold prices is a reflection of several factors converging at once.
The most immediate cause appears to be the rise in U.S. Government bond yields. When yields on these bonds climb, gold becomes less attractive to investors seeking a return on their capital. Remember, gold doesn’t pay interest, so investors frequently enough see it as a “safe haven” during times of economic uncertainty. If safer alternatives like government bonds offer better returns, gold tends to lose some luster.
Impact of a Stronger Dollar and the Holiday Season
sarah Jensen: You mentioned the rise in bond yields. Is there anything else contributing to this price dip?
Dr.David Smith: Absolutely. The US dollar has been strengthening considerably in recent weeks. A stronger dollar makes gold, which is priced in dollars, more expensive for international buyers. This reduces demand and puts downward pressure on prices.
On top of that, we’re in a relatively quiet trading period due to the holidays. This means there tend to be fewer buyers and sellers in the market, making prices more susceptible to even small shifts in sentiment.
Looking Ahead: Gold’s Long-Term Outlook
Sarah Jensen: Despite this recent dip, gold has seen tremendous gains this year.
What are your thoughts on gold’s long-term prospects,especially considering the potential changes in economic policy under a new administration?
Dr. David Smith: That’s a great question. It’s true that gold saw an remarkable run-up in 2023 driven by factors like the federal Reserve’s easing interest rates and geopolitical uncertainty.While some analysts predict fewer interest rate cuts from the Federal Reserve in 2025, I believe gold still has strong long-term potential. Geopolitical tensions remain elevated,central banks worldwide continue to buy gold,and we still have significant uncertainty surrounding Trump’s potential trade policies. If tensions increase or we see a resurgence in trade wars,gold could once again become a highly sought-after safe-haven asset.
Sarah Jensen: thank you so much for providing your expertise, Dr. Smith. I think this will be very helpful for our readers in understanding the complexities of the current gold market.
