Carsten Fritsch, commodities analyst at Commerzbank, said the price of gold came under pressure in the immediate aftermath of Donald Trump’s election victory, falling more than 3% to $2,650 an ounce.
Trump’s policies are likely to increase inflation risks.
From last week’s record high, gold fell around $140. The reason for the selling pressure was the significantly stronger US dollar and the sharp rise in US bond yields. In the previous weeks, none of these factors were a hindrance to gold. However, the extent to which the US dollar appreciated and yields rose seems to have been too strong this time to be ignored by gold.
In addition, gold gained significant correction potential due to the strong increase in prices in previous weeks.
which was not based on a change in interest rate expectations. Some market participants seem to have used this as an opportunity to close positions. This can be seen, for example, from outflows from gold ETFs observed for a few days.
However, we do not expect the weakness of gold prices to last long.
as shown by the recovery we saw yesterday to just over $2,700. The Fed’s 25 basis point rate cuts yesterday and the prospect of further rate cuts remain in favor of gold. In addition, Trump’s policies are likely to increase inflation risks.
which is why gold demand is likely to remain a hedge against inflation.”.
Gold prices are heading for a weekly loss as the yellow metal was hit by the dollar’s rally after Donald Trump’s victory in the 2024 US presidential election.
Gold falls 0.4% on Trump’s expectations after victory
The precious metal continued its downward trajectory on Friday.
after a day of losses yesterday, falling 0.4% in morning trading in Europe to $2,694 an ounce.
Analysts attributed the weakness to the strength of the dollar and speculation about what Trump’s term might mean for geopolitics. Much of the sell-off can be blamed on the US dollar, which rose after the news.”
“This, in turn, can be blamed on the sharp rise in bond yields as investors feared that Trump’s promised tariffs and tax cuts could lead to a return to inflation. Since then, dollar and bond yields have fallen to more reasonable levels. This gold helped find a floor and put a little rise yesterday.” Meanwhile, other analysts have pointed to the possibility of traders booking profits after a strong rally.
Naeem Aslam, chief investment officer at Zai Capital, said: “Gold prices are on track to record their first week in more than four weeks in negative territory.
which shows that traders are starting to take profits.”
“At the same time, it is important to keep in mind that there is a strong uptrend in gold prices.
which means that any decline in gold prices makes the yellow metal more attractive among deal hunters.
which means that we may not see any significant decline in the price of the yellow metal.”
“The recent slide in gold prices is largely due to the strength of the US dollar.
supported by investors’ expectations that economic policies under former President Donald Trump may spur growth and inflation.”
Gold prices on the Comex are set to lose more than 2% since last week’s close as prices trade below the $2,700 an ounce mark on Friday.
Record Bitcoin Flows Exceed Gold at AUM
Record flows into digital assets highlight the shift of investor interest away from traditional safe assets such as gold. BlackRock’s iShares Bitcoin Trust (IBIT) surpassed its gold-traded counterpart, iShares Gold Trust (IAU), in Assets Under Management (AUM). IBIT collected About $33.1 billion of assets under management, surpassing IAU, which currently holds about $32.9 billion in assets.
IBIT, launched in early 2024, raised more than $10 billion in assets during its first two months of trading, a feat that the first gold ETF took about two years to achieve.
According to data tracked by farside Investors, IBIT has recorded more than $27 billion in net inflows since its launch.
with a record $1.1 billion added in a single day on November 7.
Among industrial metals, copper prices fell on the London Metal Exchange as traders’ focus shifted to the Chinese National People’s Congress meeting.
The rise in IBIT assets can be attributed to several factors, including strong demand from retail and institutional investors. The recent rise in bitcoin prices has also fueled this growth; Coin Gecko data showed that bitcoin hit an all-time high of $76,800 yesterday.
The appreciation of the dollar makes commodities priced in greenback less attractive to foreign investors, limiting demand and pushing prices down.
The success of bitcoin ETFs over gold ETFs is particularly noteworthy because gold has historically served as a safe-haven asset. The growing interest in bitcoin indicates a shift in sentiment as more individuals and institutions consider the leading crypto asset as an alternative or complement to traditional assets such as gold.
