Gold prices plunged on Wednesday November 6, 2024 by almost 3% to reach their lowest level in three weeks. As investors flocked to the US dollar following the election of Republican Donald Trump to the US presidency.
Against this backdrop, spot gold fell 2.8% to $2,667.19 per ounce; after hitting a three-week low during the day. Similarly, US gold futures ended 2.7% lower at $2,676.30 per ounce.
“A clear presidential victory, as the market prepared for a contested outcome, as well as a stronger dollar sent gold lower.” This was stated by Rona O'Connell, an analyst at StoneX.
Indeed, Donald Trump returns to the White House after having obtained 295 electoral votes necessary to win the presidency.
Separately, investors believe a Trump presidency will strengthen the dollar, forcing the FED to halt its rate-cutting cycle if inflation accelerates after new tariffs are imposed.
The U.S. dollar index rose to a four-month high, making gold more expensive for foreign buyers.
“Gold will rebound against the risk of rising inflation. Which could slow down the fall in US rates,” said Ole Hansen, head of commodities strategy at Saxo Bank. “The Federal Reserve will likely cut interest rates. But the statement that follows will be of great interest and should be watched carefully for possible signs of a pause.”
In addition, note that the market expects the FED to announce a rate cut of 25 basis points, after a 50 basis point cut in September.
Among other metals, silver fell 4.7% to $31.13 an ounce, platinum fell 1.5% to $984.86 and palladium fell 3.5% to $1,038.25. . All three metals hit three-week lows during the day.
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