Gold Takes a Dramatic Plunge While Trump Takes the Stage
Gold’s price has dipped below $2,700 per ounce in spot trading—clearing out the November gains and leaving investors scratching their heads. At the same time, the US dollar and Treasury yields are on fire, posting what could be the biggest daily jump this year as former President Donald Trump makes a triumphant return to the White House.
The Spectacle of the U.S. Economy
- Trump’s victory: He’s nailed 277 Electoral College votes, with most counted—a big win according to The Associated Press.
- Yields on the rise: The 10‑year Treasury surged 200 basis points to 4.477%—the highest level since early July. The 2‑year note gained about 100 basis points, making the spread widen at almost 100 basis points fastest this year.
- Dollar Index: It climbed more than 1.7%, reclaiming the 105‑point zone for the first time since July. Investors see this as a hint that inflation may rise in the long run.
Implications for Gold and the Fed
With expectations of a tougher policy stance from the Fed, the appetite for gold—its usual safe‑haven status—is cooling. The CME FedWatch Tool now suggests a 32% chance of a 25‑basis‑point rate cut in January (down from 69% a month ago). If the Fed tightens further, gold could keep sliding.
What About the Global Scene?
- Asia’s appetite: The World Gold Council reports that Asia (minus the Middle East) accounts for 67% of global gold bar and coin demand. Even as housing prices sag in China, investors might turn to gold for a bit of sparkle.
- Trade war jitters: The IMF warns that a resurgence of trade wars could stoke uncertainty, risking growth across the region. Some investors may seek the “gold rush” to hedge against such volatility.
- Middle East drama: Netanyahu is leaning on Trump’s presidency to tighten on Iran—a move that could further destabilise the region. Meanwhile, Trump’s previously stated intention to possibly end regional wars might clash with Netanyahu’s plans.
- Ukraine’s plight: Trump’s desire to end the war in Ukraine has faced skepticism from Zelensky, who warns that cutting aid could force stalled negotiations. The tug‑of‑war is far from over.
Bottom Line
In a nutshell, gold’s dip is a symptom of a larger market shift: stronger dollar, high Treasury yields, and a controversial political climate that could keep inflation humming and the Fed cautious. While some sectors look to gold for comfort, others brace for the fallout of geopolitical games. Stay tuned for more twists in this next chapter of the global economy!
