Gold stumbles after Donald Trump's victory, opportunity or not?

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– Or, lingot

Gold lost its luster following Donald Trump's clear victory over Kamala Harris in the American presidential election. Since November 5, the price of an ounce of the king of precious metals has fallen by no less than 5%, to $2,608. Indeed, while gold is considered a safe haven against uncertainties, the clear victory of the Republican candidate (who won by a good margin over the Democratic candidate) quickly removed the uncertainties surrounding the vote. , explains the Comptoir national de l’or.

The United States stock market soared, with stock investors expecting a positive impact from Donald Trump's economic program, considered favorable to business (deregulation, tax cuts, significant spending, etc.) and to corporate profits. listed on Wall Street. Gold, traditionally negatively correlated with risky assets (such as stocks), has lost some of its safe-haven value and has therefore, without much surprise, corrected downwards (after an imposing bullish rally in recent months), argues the specialist in precious metals.

Gold suffered from the jump in long-term rates and the dollar, boosted by the election of Donald Trump

With a program capable of boosting the American economy and the prospect of customs duties which will mechanically increase the cost of imports, we can however quickly fear new inflationary tensions, fears which have caused the long-term rates of the States to rise. United. As is often the case, gold has suffered recently from the rise in real rates (long-term rates less medium-term inflation expectations). Indeed, gold logically suffers from arbitrage phenomena (better remunerated than before, a government bond seems all the more attractive compared to gold, an investment that does not offer income). Finally, the US currency appreciated, another headwind for gold. Indeed, as the yellow metal is quoted in dollars, it automatically increases in price for investors with other currencies, when the American currency strengthens.

But a surge in geopolitical tensions could boost gold again

However, gold could quickly benefit from the new geopolitical tensions that Donald Trump's second term could encourage. The Republican billionaire has already shown over the last decade his unpredictability and his protectionist inclination. And during his new mandate, he is likely to do it again, that is to say, to reserve new surprises for the financial community and to intensify the trade war. In this case, it will be necessary to closely monitor how China, Russia, Ukraine and Iran react to Trump's statements and decisions, warns the National Gold Comptroller, for which these countries have learned lessons of Trump's first term and could be bolder in their reactions.

A probable renewal of geopolitical tensions which could revive the interest in gold as a safe haven against shock risks. So, even if the gold price correction may continue a little, the characteristics of the precious metal will continue to be appreciated by the financial community. And gold could move forward again. The Swiss private bank Lombard Odier thus maintains its overweighting in gold “as a portfolio hedging instrument» and to face geopolitical risks. The private bank Pictet, which cites increased uncertainties and potential geopolitical tensions, has adopted the same positioning on gold, reports the Comptoir national de l'or.

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