The Gold price came under pressure in the immediate aftermath of Donald Trump's election victory and, with a decline of almost 2%, recorded its largest weekly loss since the end of May, Commerzbank’s commodity analyst Carsten Fritsch notes.
“Yesterday, the price fell sharply again and continues to fall today. In the morning, Gold slid below the $2,600 per troy ounce mark. From its record high at the end of October, Gold has thus fallen almost $200. The selling pressure was caused by a significantly stronger US Dollar (USD) and a sharp rise in US bond yields. Yesterday, the trade-weighted US dollar index rose to its highest level since the beginning of July.”
“The US 10-year yield also marked a four-month high the day after the election. Trump's proposed tariffs are likely to lead to higher inflation, making further interest rate cuts by the Fed more difficult. Our economists have raised their forecast for the bottom of the US key interest rate by 50 basis points to 4%. This means that there should only be two further interest rate cuts by the Fed of 25 basis points each after the expected rate cut in December.”
“In the weeks leading up to the election, the USD had already risen markedly in anticipation of a Trump victory. However, this did not stop the Gold price from rising to new record highs. Apparently, market participants are acting after the election according to the principle of ‘buy the rumour, sell the fact’.”
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