Gold value plummets after Donald Trump's victory

After breaking several records this year and appreciating 35%, the price of gold fell 7% in November. It's the product's worst in three years. The cause of the fall was Donald Trump's victory in the United States elections which, on the other hand, ended up boosting the dollar. The current price of the metal is US$2,561, or R$14,800 for each “troy ounce”, the unit of measurement used for gold.

The operators' idea is that there will be fewer cuts in the American interest rate, which will increase the value of the currency. As a result, around US$600 million of gold-backed funds were withdrawn in the first week of November. Therefore, the fall of the metal is justified by the change in strategy in the leasing of financial resources by investors.

Experts' opinion

Despite the sharp drop, analysts point out that the movement was already expected. There was a lot of speculative money that went into gold's rise and that, naturally, is being withdrawn now. Head of research at gold refiner MKS Pamp, Nicky Shiels explains the phenomenon (via Folha de S. Paulo):

“There has been an influx of money into bitcoin and Tesla, the Trump trades, and this is attracting money from typical safe havens like gold… It is not a reversal of the uptrend, gold simply rose too fast and is now reversing to a less optimistic trajectory.”

Rhona O'Connell, head of market analysis at brokerage StoneX, recalls that not only did Donald Trump win the elections but also the Republicans took control of Congress. Furthermore, the price of gold historically tends to fall in the first 12 weeks after elections.

_{Trump will be President of the United States again (Photo: reproduction/@realDailyWire/X)}

Future projections

On the one hand, there is a lower demand from Central Banks for gold. In 2024 alone, Central Banks purchased 694 tons of the metal. However, strategists are betting that gold will experience a new period of growth next year. Tom Price, analyst at Panmure Liberum, recalls that (via Folha de S. Paulo) “the themes that took gold to this level are still present”. Conflicts in the Middle East and the war between Russia and Ukraine, for example, are factors that cause uncertainty and, consequently, a search for gold.

Featured Photo: Gold fell 7% in November (Reproduction/sofiatailor/Pixabay)