Gold prices drop as US dollar rises following Trump's election win

Gold prices tumbled sharply on November 6, pressured by a surge in the dollar following Trump’s victory in the 2024 US presidential election, with spot gold falling by 2.2 per cent to $2,684.69 per ounce and December gold futures dropping by 2 per cent to $2,694.30 per ounce by 08:05 ET (13:05 GMT).

The decline was driven by a stronger dollar, which surged to a near four-month high after Trump was elected the 47th president of the US, securing a second term in the White House, Caliber.Az reports per foreign media.

The Republican Party has also gained a majority in the Senate and was on course to win the House of Representatives, raising the possibility of a Republican clean sweep in the 2024 elections.

This would provide Trump with a clearer path to implement key policy changes, many of which are considered inflationary. Such a scenario is expected to keep interest rates higher for an extended period, which would support the strength of the dollar.

A stronger US dollar makes dollar-denominated commodities like gold more expensive for holders of other currencies.

Other precious metals also saw declines on November 6, with platinum futures falling by 2.2 per cent to $984.35 per ounce, and silver futures dropping by 3.1 per cent to $31.773 per ounce. Despite these losses, gold remained near recent record highs.

Gold could potentially reach $3,400 per ounce if US real interest rates fall to zero, according to analysts at Bernstein. They noted that fiscal policies under a Republican-led government could weaken the dollar, benefiting gold.

"Gold has an established negative relationship with the US dollar and real rates," Bernstein commented, as gold typically appreciates when fiat currencies like the dollar weaken.

Meanwhile, a move towards $3,400 per ounce would likely require either a Republican or Democratic sweep in the US election, Bernstein said, as such a result would likely lead to higher US fiscal deficits and debt, putting downward pressure on real interest rates.

In the industrial metals sector, copper prices also fell sharply, driven by the prospect of increased economic pressure on China, the world’s largest copper importer, under Trump’s leadership.

Benchmark copper futures on the London Metal Exchange dropped by 3.8 per cent, to $9,364.50 per tonne, while December copper futures fell by 4.6 per cent, to $4.2710 per pound.

Trump has pledged to impose heavy trade tariffs on China, intensifying economic pressure on the country as it struggles with persistent deflation and a prolonged downturn in its property market.

By Aghakazim Guliyev