Gold prices saw a fall to a level near a two-month low on Thursday in response to the risk-on sentiment and strengthening US dollar, after Donald Trump’s election victory last week.
Spot prices for the precious metal declined almost 7% since the election, touching $2,552.48 per ounce at 1:49 PM (Bangkok time). Meanwhile, Gold futures were trading at $2,560.8 on the New York Mercantile Exchange.
This downturn comes after a series of record-breaking peaks for the yellow metal over the past year. Citi’s global head of commodities research, Maximilian Layton, suggested a pause in the bull market for both gold and silver could persist for the coming weeks.
Layton stated that lower prospects of tax and regulations are likely to pull gold prices down as US equities rally. The comeback of Trump’s presidency pushed US stocks to new highs, although the growth seems to have currently stabilised.
The post-election risk-on sentiment has also buoyed cryptocurrencies, with bitcoin exceeding the $93,000 mark for the first time on Wednesday. Market optimism is building on Trump’s commitments to the crypto industry.
Furthermore, a surge in the dollar index to a one-year peak has made gold, priced in the greenback, more expensive for those holding other currencies.
However, despite the tumble in gold prices, market observers remain positive about the fundamentals of the bullion market. The core drivers of the gold market persist, says Layton, pointing to rising speculations about Trump’s tariff propositions and their possible global economic implications.
Financial services firm, Canaccord Genuity, forecasts that the demand for gold from central banks will likely hold steady or even escalate, given the existing scenario of the US fiscal outlook and mounting geopolitical tensions. This prediction comes on the back of central banks purchasing gold in record amounts during the first half of 2024.
The firm forecasts that a combination of escalating debt, geopolitical strains, and central bank demand will bolster higher gold prices.
