Gold's Luster Dims Post-Trump Victory

The price of gold has fallen more than 4% since Donald Trump's presidential victory, affected by a stronger US dollar and expectations of fewer Federal Reserve rate cuts. Despite its decreased appeal, gold remains a favored safe haven investment amidst ongoing global conflicts and political uncertainties.

The glitter of gold, which shone brightly for most of the year, has dulled in the days following Donald Trump's election win. In just four days post-election, gold's price dropped over 4%, contrasting sharply with the nearly 4% rise in the broader US stock market.

In the wake of Trump's impending administration, investors anticipate lower tax rates coupled with higher tariffs, a mix that could inflate government debt and inflation—typically a boon for gold prices. Yet, the metal currently trades at USD 2,618 per ounce, down from last month's peak of approximately USD 2,800. The largest gold-tracking ETF's 2024 gains have slipped below 27% from nearly 35% earlier.

This downturn aligns with a strengthened US dollar against other currencies, influenced by US-driven tariffs and trade tensions. The dollar's strength makes gold pricier for international buyers, while anticipated fewer interest rate cuts from the Fed may boost Treasury bond interest, rendering gold less attractive despite its status as a global safety net amid ongoing geopolitical strife.

(With inputs from agencies.)