As the dollar slid following an interest rate cut by the Federal Reserve and the re-election of Donald Trump, gold prices took a hit in Asian trade on Friday. The yellow metal faced pressure from a strong dollar after Trump’s victory, but the currency retreated from its recent highs after the Fed’s rate cut announcement.
Gold futures fell 0.4% to $2,695.93 an ounce, while December futures slipped 0.1% to $2,702.80 an ounce by 23:38 ET (04:38 GMT).
Gold Heads for Weekly Loss After Post-Trump Drubbing
Spot gold is on track to see a weekly loss of about 1.6% following Trump’s win. The decline was fueled by a rally in the dollar and Treasury yields as investors speculated on potential inflationary policies under Trump’s presidency.
While the election outcome brought an end to uncertainty in the markets and boosted risk-driven assets, it also led to a drop in gold prices after reaching record highs before the election.
Fed Rate Cut Offers Gold Some Relief
Gold prices found some relief after the Fed cut interest rates, as expected. Fed Chair Jerome Powell reassured that the U.S. economy was resilient and hinted at further monetary easing, providing temporary relief for gold and other non-yielding assets.
However, concerns over the longer-term outlook for rates under a Trump presidency have left markets uncertain.
Copper Dips, China NPC in Focus
Copper prices retreated on Friday, but are poised for gains this week as traders await cues on fiscal stimulus from China. Benchmark copper on the London Metal Exchange fell 0.7% to $9,614.0 a ton, while December copper dropped 0.9% to $4.3970 a pound.
China’s National People’s Congress is expected to unveil plans for increased fiscal spending, primarily aimed at supporting economic growth amidst deflation and a slowing property market.
Analysis:
In summary, gold prices fell due to a stronger dollar post-Fed rate cut and Trump’s re-election. The uncertainty surrounding Trump’s policies led to a decline in gold prices despite the relief offered by the Fed’s rate cut. Additionally, copper prices dipped but are expected to recover as China plans for fiscal stimulus. Investors should monitor these developments closely to make informed decisions about their investments in precious metals.