Gold Sinks as Trump Win Strengthens Dollar

Fundamental Analysis

* Trump Triumph: Gold prices have dropped sharply after Donald Trump’s victory in the 2024 presidential election, which has boosted both the dollar and Treasury yields. Treasury yields rose amid expectations that a second Trump administration might implement policies, such as tariffs, that could drive up inflation and lead the Fed to moderate its rate-cutting approach. Republicans have also gained a majority in the Senate and are on track to win control of the House of Representatives, indicating a potential Republican sweep in 2024. This outcome would facilitate Trump’s push for significant policy changes, many of which are expected to be inflationary, likely keeping interest rates higher over the long term and strengthening the dollar.

Technical Analysis

* Technical Breakout: Gold price was traded lower following prior breakout below the previous support level 2675.00. MACD which illustrate strong bearish signal suggest the commodity to likely further its losses.

* Resistance and Support: If the bearish momentum persists, there’s a strong likelihood that the price will potentially head towards the level 2625.00. Conversely, a potential reversal is also to be expected and the price could head back towards 2675.00.

Potential Risks

With the elections concluded, investors are shifting their focus back to the U.S. economic agenda, which includes Thursday’s Federal Reserve (Fed) policy decision. The central bank is anticipated to cut interest rates by 25 basis points, setting them within the 4.50%-4.75% range.

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Monitoring

Stay updated on US data, central bank updates and any shifts in the US Dollar’s strength by following PU Xtrader’s financial news page.

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