Last week, gold recorded its lowest weekly price in more than three years. The dollar surged and Trump’s victory in the US presidential election halted the metal’s rally.
After rising more than 35% since the beginning of the year and hitting consecutive highs, bullion prices fell nearly 7% in November, to $2,561 an ounce. They fell more than 4% for the week.
Trump’s victory has investors reconsidering the potential impact of policies. Traders predict fewer rate cuts and a stronger dollar, as they worry that domestic tax cuts and import tax increases could lead to higher inflation, forcing the US Federal Reserve to keep interest rates high for longer.
Meanwhile, gold is a non-interest-bearing asset and tends to benefit from low interest rates.
Investors pulled $600 million out of gold ETFs in the week ending November 8, the most since May, according to the World Gold Council.
Analysts say the decline is due to money flowing into gold moving into other assets. Nicky Shiels, director of research at gold refiner MKS Pamp, said there was some money flowing into Bitcoin and Tesla shares. He added that gold had simply risen too fast and was returning to normal.
The price of gold bullion rose more than 1% to $2,597 an ounce in the new week. Some strategists remain optimistic that gold prices will continue to rise.
Although Fed Chairman Jerome Powell said last week that he would not rush to cut interest rates, many policymakers have signaled further easing.
Chicago Fed President Austan Goolsbee said on November 15 that interest rates will remain much lower in the next 12-18 months, as long as inflation continues to fall to the 2% target. Boston Fed President Susan Collins also said a December rate cut is still on the table.
In addition, analyst Tom Price at Panmure Liberum pointed out that part of the reason for the gold price increase is the conflict in the Middle East and Ukraine. And this expert said that geopolitical risk has not changed since Mr. Trump was elected.
