On Thursday (November 7th) during the early Asian trading session, the price of spot gold experienced a slight, volatile rise, currently hovering around $2662.35 per ounce. Previously, on Wednesday, gold prices plummeted dramatically, dropping more than $80 in a single day, closing at $2658.78 per ounce, marking a decline of approximately 3.1% – the largest single-day drop since June 7th, with a low touching $2652.35 per ounce. This decline is closely linked to the results of the U.S. Presidential election: the unexpected victory of Republican candidate Trump led to a significant rebound in the dollar, reaching a four-month high, while U.S. Treasury yields climbed, and U.S. stocks also hit historical highs, further suppressing the market's demand for gold as a safe haven.
Trump's victory has heated up market expectations regarding his economic policies. Investors anticipate he will implement large-scale tax cuts and increase import tariffs, fostering optimistic sentiments about U.S. economic growth, while also sparking concerns over accelerating inflation. This expectation triggered a broad surge in the stock market, with the S&P 500 index soaring 2.53% and achieving a historical high; small-cap stocks and bank stocks recorded particularly significant gains, as these sectors may benefit greatly from Trump's lenient regulatory policies.
The Republican success in controlling the U.S. Senate further bolstered market confidence in the "Trump trade." Investors are also watching the results of the House elections, as a Republican sweep in Congress could provide stronger support for Trump's policy agenda. This prospect seems highly likely at the moment. As the market gradually absorbs the election uncertainties, gold prices are pressured by the strengthening of the dollar.
Additionally, the Federal Reserve's interest rate decision is a key focus of the market this week. It is expected that the Federal Reserve will announce a 25 basis point rate cut to continue easing monetary policy. However, if Trump's economic plan can bolster the economy, it may slow down the Fed's rate-cutting pace. Economists at Nomura Securities noted in a report that the Fed might only cut rates once in 2025, considering policy adjustments only after the inflation shock from tariffs subsides.
This trading day, the U.S. will also release initial jobless claims numbers, and investors should pay close attention. Meanwhile, the long-term impacts of Trump's victory remain to be further interpreted. At 3 a.m. Beijing time on Friday, the Federal Reserve will announce its latest interest rate decision, followed by a press conference with Fed Chair Powell at 3:30. Technically, on the daily chart, gold prices have broken below the middle track of the Bollinger Band and the ascending channel, with potential support at the lower track of the Bollinger Band near $2621.56 and the October 10th low of $2602.54.
