Gold prices fell sharply on Wednesday, hitting a three-week low as markets responded to Donald Trump’s victory. Spot gold is currently down 2.77% to US$2,667.86 an ounce, marking its largest one-day loss in five months.
A rotation into riskier assets, like equities and cryptocurrencies, and a surging US dollar were big contributors to this drop.
The US Dollar Index, which measures the USD against a basket of other currencies, is currently up 1.54%, reaching its highest point since July. Analysts attribute this rally to expectations of stimulus from tax cuts and other pro-business policies. A stronger dollar makes dollar-denominated commodities, like gold, more expensive for holders of other currencies, further weighing on demand.
Other commodities also faced downward pressure. Silver futures are currently down 4.36% to US$31.35, spot platinum is down 1.17% to US$989.51 an ounce, and copper futures are down 5.16% to US$424.40 a pound.
This is amid concerns that Trump’s approach could slow down the energy transition and shift away from green initiatives, impacting demand for metals like copper and zinc that are crucial for electrification and renewable energy projects. It's also with an eye on Trump tariffs, particularly the potential 60% tariff on Chinese goods, which could disrupt global supply chains and reduce demand for key materials.
The 10-year US Treasury yield has risen to 4.43%, reflecting investor anticipation of increased government borrowing and inflationary policy under Trump’s administration. Bitcoin, benefiting from Trump’s perceived crypto-friendly stance, is currently sitting on a record high of US$75,660.05.
Despite recent losses, gold remains close to record highs, suggesting that any shifts in US monetary policy or global geopolitical developments could renew its appeal as a safe haven.
