GOLD PRICES fell to a 4-week low on Monday, extending the worst performance in 5 months as the US Dollar surged to a new 4-month high following the election of former US President Donald Trump to the White House,
writes Atsuko Whitehouse at BullionVault.
So-called
crypto currency Bitcoin meanwhile hit an all-time high, and US stocks extended their gains to new record highs, as investors prepared for a potential "red sweep" scenario, where Republicans also control both houses of Congress.
Spot gold prices dropped 1.8% to $2636 per ounce after making a 1.9% decline last week, the steepest weekly fall since early May.
That drop came despite the Federal Reserve cutting Dollar interest rates by 25 basis points on Thursday to a range of 4.5% to 4.75% as expected.
While US bond markets are closed for Veterans Day on Monday, the Dollar index – an indicator of the US currency's value relative to major peers – climbed to its highest level since early July after weekend election results saw President-elect Trump secure victories in Nevada and Arizona, completing a clean sweep of the 7 key swing states.
"Gold's drop is due less to Trump's victory than the fact that the uncertain outcome of the election, which was expected to be prolonged, was resolved surprisingly quickly," says Bruce Ikemizu, chief director of the Japan Bullion Market Association.
Bitcoin meanwhile rose 7.1% last month and has surged another 8.9% so far in November, topping $82,000 for the first time on the prospect of pro-crypto lawmakers packing 2025's Republican-led Congress.
Trump pledged several pro-crypto measures during his election campaign, easing regulations and aiming to make the USA the "crypto capital of the planet", contrasting sharply with the current Democratic administration's perceived hostility toward alternative assets.
US equity futures pointed to further gains on Monday after the S&P500 and the Dow Jones Industrial Average both posted their largest weekly percentage gains since early November 2023 and the tech-stock Nasdaq recorded its 2nd best week of 2024, also closing Friday at a fresh record high.
"Equities are eager to price in Trump's domestic growth policies and hopes for easier regulation relative to the Biden administration," says a strategist at Barclays in a note to clients.
For UK and European investors,
gold priced in British Pounds and in the Euro dropped on Monday toward 4-week lows, falling below £2050 and €2480, respectively.
Meanwhile in China – the precious metal's No.1 consumer nation – prices on the Shanghai Gold Exchange edged up to ¥614 per gram but were still 3.6% lower than Halloween's all-time gold high.
That meant gold in Shanghai also continued to trade at a discount to London prices, albeit trimming the gap to $14 on Monday after last week's average reached the steepest discount in four at $16 per Troy ounce.
Oil prices stabilized in European trade after making further losses in Asian hours on disappointment over Beijing's latest economic stimulus measures, with the Politburo's approval of around 10 trillion Yuan ($1.4 trillion) in measures aimed at reducing local government debt falling short of market expectations.
Data over the weekend showed continued deflation in China's domestic prices, with the consumer price index contracting 0.3% in October and the producer price index falling 2.8% year-over-year, dropping for the 25th consecutive month.
Key US inflation data is due this week, first in the consumer price index on Wednesday and then the producer price index on Thursday. Both will be closely watched ahead of the Federal Reserve's next policy meeting on December 17-18.
"In the near term, the election
will have no effect on our policy decisions," said Federal Reserve Chair Jerome Powell during his regular press conference following last Thursday's Fed meeting.
But as the new administration's policies take shape, said Powell – appointed by but then repeatedly rebuked by Trump during the President-Elect's first term in the White House for not cutting interest rates sharply enough – the central bank will begin assessing their impact on its twin goals of stable inflation and maximum employment.
Silver, primarily an industrial metal, fell 2.0% to $30.67 per ounce on Monday, sinking to a 4-week low after losing 3.6% last week.
The week ahead will be "a little boring comparing to the [recent] mix of turmoil & excitement," says Nicky Shiels, head of metals strategy at Swiss bullion refining and finance group MKS Pamp.
"Gold doesn't like boring; no new bad news should lead to [investors choosing to] sell rallies" in price.
