Gold Prices Tumble as Dollar Strengthens Following Trump’s Election Victory
Gold prices experienced a significant drop on Monday, November 11, falling by more than 2% as the U.S. dollar strengthened in the wake of Donald Trump's election as U.S. President. The precious metal's value declined by $64.75, or 2.41%, closing at $2,619.23 per ounce, with prices reaching as low as $2,610.61 during the trading session.
The U.S. Dollar Index, which measures the greenback against six major currencies, climbed 0.60% to 105.57, reaching its highest level since early July. This surge in the dollar's value made gold less appealing to buyers using other currencies.
Market analysts attribute the gold price decline to several factors. The strengthening dollar, rising U.S. Treasury yields, and increased risk appetite in financial markets all contributed to the downward pressure on gold. Trump's election victory has led to a reassessment of expectations for interest rate cuts in 2025, with traders now predicting a 65% chance of a 25 basis point cut in December, down from about 80% before the election results.
The potential for Trump's fiscal policies, including tax cuts and spending programs, as well as the possibility of increased tariffs, has created uncertainty in the market. Rumors of Robert Lighthizer, a known supporter of Trump's tariff policies, becoming the director of the U.S. Trade Office have further fueled concerns among investors.
The U.S. stock market reached record highs on Monday, while the Treasury market remained closed for Veterans Day. Real yields, which typically have an inverse relationship with gold prices, increased by two basis points to 1.978%.
Traders will be closely monitoring comments from Federal Reserve officials and upcoming economic data releases, including consumer and producer inflation figures and retail sales reports, to gauge the future direction of gold prices.
As the market adjusts to the new political landscape, gold's performance in the coming weeks will likely depend on the evolving economic policies and their impact on inflation, interest rates, and the strength of the U.S. dollar.
