Donald Trump’s victory in the 2024 U.S. presidential election served as a powerful catalyst for a rally in the stock and cryptocurrency markets. However, not all assets benefited from this shift, especially gold, the world’s most significant commodity with a market cap exceeding $17 trillion.
Gold’s Decline After Trump’s Election
Following the election results on November 6, gold’s long-standing rise came to an abrupt halt, leading to a sharp decline. The price of gold dropped from nearly $2,800 in late October to $2,547 at the time of writing. This dramatic fall was particularly noticeable in the final five days of trading, resulting in a 5.78% decline.
Gold’s fall below its 100-day moving average (MA) and the breach of the $2,536 mark signaled a two-month low. If the precious metal attempts a rebound, it could face resistance near $2,580, with further upward movement testing the $2,600 mark.
Is This 2024 Gold Price Drop a Repeat of 2016?
The market response to Trump’s re-election shares similarities with 2016, where gold saw a similar reaction during his first presidential victory. However, there are key differences between the two periods. In 2016, gold was already on a broader downtrend, whereas in 2024, it had been in a nearly uninterrupted rally until election night. This difference points to a unique market dynamic in 2024.
Factors Contributing to Gold’s Decline
Several factors likely contributed to gold’s recent price drop:
- Shift to Riskier Assets: With the stock market rallying—Bitcoin (BTC) recently surged above $90,000, and the S&P 500 briefly crossed 6,000 points—investors might be selling off gold and silver to buy stocks and crypto.
- Reduced Geopolitical Tensions: Trump’s foreign policy stance, particularly his relationship with Russian President Vladimir Putin, has led many to believe that geopolitical risks—such as the War in Ukraine—may subside, which typically reduces the demand for gold as a safe-haven asset.
- Strong U.S. Dollar: A surge in the U.S. dollar, partly fueled by geopolitical shifts, has weighed heavily on gold prices. Additionally, efforts to de-dollarize by BRICS nations might also be influencing this trend.
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What’s Next for Gold?
While the $200 drop in gold’s price over just two weeks indicates the possibility of further declines, analysts are divided on what comes next. Mike McGlone, Bloomberg Intelligence’s senior commodity strategist, suggested that gold could bottom out as low as $2,400 before potentially making another attempt to reach $3,000. Conversely, if the price continues to slide below $2,400, a retest of the $2,000 mark could be on the horizon.
The 2024 gold price drop marks a shift in the market dynamics following Donald Trump’s re-election. With a possible foundation at $2,400 and factors like reduced geopolitical tensions and shifting investor priorities, it remains to be seen whether gold will rebound or continue its downward trajectory in the coming months.
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