Gold prices fell sharply on Wednesday, hitting a three-week low as markets responded to Donald Trump’s victory. Spot gold is currently down 2.77% at $2,667.86 an ounce, marking its biggest daily loss in five months.
The rotation into riskier assets, such as stocks and cryptocurrencies, and the surge in the US dollar contributed largely to this decline.
The U.S. dollar index, which measures the U.S. dollar against a basket of other currencies, is currently up 1.54%, hitting its highest point since July. Analysts attribute this rally to expectations of stimulus from tax cuts and other business-friendly policies. A stronger dollar makes dollar-denominated commodities, such as gold, more expensive for holders of other currencies, further weighing on demand.
Other commodities also came under downward pressure. Silver futures are currently down 4.36% at $31.35, spot platinum futures are down 1.17% at $989.51 an ounce, and copper futures are down by 5.16% to $424.40 a pound.
This comes amid concerns that Trump’s approach could slow the energy transition and move away from green initiatives, impacting demand for metals such as copper and zinc that are crucial for electrification and renewable energy projects. He is also keeping an eye on Trump’s tariffs, particularly the potential 60% tariff on Chinese goods, which could disrupt global supply chains and reduce demand for key materials.
The yield on 10-year U.S. Treasury bonds rose to 4.43%, reflecting investors’ anticipation of rising government debt and inflationary policy under the Trump administration. Bitcoin, benefiting from Trump’s perceived pro-crypto stance, is currently at a record high of $75,660.05.
Despite recent losses, gold remains near all-time highs, suggesting that any changes in U.S. monetary policy or global geopolitical developments could renew its appeal as a safe haven.