“The clarity of a decisive presidential outcome, rather than a contentious one, has contributed to the shift in investor sentiment,” said an analyst at OANDA.
Historically, gold has performed well during periods of uncertainty and economic instability. However, with Trump’s victory, the market is now pricing in expectations of a stronger economy, potentially higher inflation and rising interest rates – all factors that traditionally support the dollar but put pressure on gold.
The dollar index, which measures the greenback’s strength against a basket of other currencies, has hit a four-month high, further reducing gold’s appeal to foreign buyers.
US economic data puts further pressure on gold
Recent economic reports have shown resilience in the US economy, especially in the services sector, which has contributed to gold’s downward trend. The US ISM Services Purchasing Managers Index (PMI) rose to 56.0 in October from 54.9 in September, exceeding expectations of 53.8.
In addition, the S&P Global Services PMI recorded a reading of 55.0, only slightly below expectations. These figures indicate steady economic growth, reducing the attractiveness of gold as a hedge against economic weakness.
“The stronger-than-expected data on the services sector highlights the resilience of the US economy, reducing the urgency for safe havens like gold,” said a senior economist at ING.