Gold suddenly not so sparkly after Trump’s White House victory – The Week

New York, Nov. 14 (AP) The price of gold, which has been high for much of this year, suddenly isn’t so gold after Donald Trump’s victory in the presidential election.
Gold has fallen more than 4 percent in the four days since Election Day, when the U.S. stock market climbed nearly 4 percent. This is despite investors expecting the Trump White House to lower tax rates and raise tariffs. Such a combination could push U.S. government debt and inflation even higher; Both of these could help the price of gold.
This left gold at $2,618 per ounce late Monday; This fell short of the record of nearly $2,800 set late last month. This also means that gold has lost some of its luster as the year’s best-performing investments. The largest exchange-traded fund tracking the price of gold has seen its 2024 gains fall below 27 percent, from around 35 percent a few weeks ago.
What’s going on? Some of the decline coincided with the strengthening of the US dollar against other major currencies. U.S.-instigated tariffs and trade wars could devalue the euro and other countries’ currencies, and a strong U.S. dollar could make it more expensive for buyers who use other currencies to buy gold.
Trump’s preference for lower taxes and higher tariffs is also forcing Wall Street to scale back expectations for how much the Fed will cut interest rates next year. Any smaller interest rate cuts would mean Treasuries pay more interest than previously expected, which could hurt the price of gold. Gold, which pays zero dividends or income to its holders, may look less attractive when bonds pay more.
Gold, of course, still maintains a reputation for offering investors a safer place to be when things are shaky around the world. Whether due to wars or political strife, investors often flock to gold when they feel insecure about other investments.
With wars still raging in the Middle East, Ukraine and elsewhere, and political tensions still appearing as high as ever, gold is likely to remain in many investors’ portfolios.
“Gold remains a safe-haven asset class for both investors and central banks,” according to money managers at Robeco, which manages investments for large institutional investors. (AP) PY
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