Last October, Gold prices soared to a record high, but Donald Trump's win is pulling it back to its record lows.
Recently, the price of Gold fell to a nearly two-month low as the dollar strengthened, which led to the material's appeal and therefore, a shift in market sentiment.
According to CNBC, Gold has now seen a nearly 7% drop, falling to $2,559.2 per ounce, after the record-breaking $2,729 and the almost $3,000 estimation by experts. The downward trend is believed to continue for a couple of weeks.
Why Gold Price Dropped
Now, the current pause in Gold's bull market is largely due to the growing optimism in other investment sectors, US equities and cryptocurrencies. Equities are especially benefiting from expectations of lower taxes and fewer regulations under Trump's second term, which sent US stock prices to new highs. While crypto like Bitcoin and Dogecoin trade past their all-time high, following Trump's promise for the industry, VCPost shared.
A strong US dollar is another key factor. The dollar, in question, has reached a one-year high which is priced in US dollars, which is more expensive for holders of other currencies. This rise is also linked to Trump's anticipated inflationary policies that will include tax cuts and tariffs. All these factors combined have driven investors away from gold and into riskier assets like stocks and cryptocurrencies.
Despite the decline, experts remain hopeful for Gold's future. Analysts believe that geopolitical tensions and increasing US debt could eventually prompt a return to Gold as a safe-haven asset. Central banks, especially during the first half of 2024, already showed strong demand for gold and may continue as a trend as global economic uncertainties grow.
Regardless, Gold will still play an important role in hedging against potential risks, but the short-term outlook is still weak.
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