Gold (XAU/USD) has fallen out of favor with investors as capital pours into riskier assets, driven by the likelihood of Donald Trump securing a victory in the 2024 US presidential election. The precious metal, once seen as a safe haven, has been down by nearly 0.5%, trading in the $2,720 range as the US Dollar (USD) strengthens, following Trump’s significant lead with 267 electoral votes — just three shy of the 270 needed for victory.
As Trump’s victory appears increasingly certain, the market has adjusted its outlook, shifting away from safe-haven assets like gold and into riskier options, including Bitcoin (BTC) and equities. The rally in these assets is fueled by expectations that Trump’s economic policies, including his stance on tariffs and deregulation, will boost the US Dollar, which in turn puts downward pressure on gold. Gold, priced in USD, traditionally suffers when the greenback strengthens, and that’s precisely what’s happening now.
The USD and Trump Trade Take Center Stage
With the growing certainty of a Trump presidency, investors are anticipating a wave of market-friendly policies, including lower taxes and deregulation. The US Dollar Index (DXY) surged by over 1.3%, peaking at 105.32 as Trump’s victory neared confirmation. This dollar strength is pushing gold lower, as it reduces the appeal of the yellow metal, which thrives in environments of uncertainty and economic instability.
Simultaneously, US stock index futures are seeing strong gains. The S&P 500 futures were up by 2.2%, while Dow Jones futures climbed 1.3%. Investors are banking on Trump’s economic agenda to stimulate growth, which has lifted stock prices and reduced demand for the safety of gold.
Bitcoin, too, has benefited from Trump’s expected policies. The cryptocurrency hit an all-time high of $75,407, as market participants anticipate a looser regulatory environment for digital assets under Trump’s administration. This influx of capital into Bitcoin, along with rising stock indices, has further undermined gold’s appeal.
The Decline of Safe-Haven Flows
Gold’s allure as a safe-haven asset had been bolstered by the uncertainty surrounding the election, but as the outcome became clearer, flows into gold started to reverse. The market had seen a rush into gold in recent weeks, with investors flocking to the metal amid the unpredictability of the election results. However, with Trump on the brink of securing the presidency, those flows have diminished. Furthermore, Trump’s bold claims about resolving global conflicts, such as the war in Ukraine, may have further reduced demand for gold as a hedge against geopolitical risk.
Also read : Pound Sterling Plummets To 11-Week Low Amid Trump’s Rise In Polls – GBP/USD Hits 1.2850
Technical Outlook: Support at $2,709
From a technical perspective, XAU/USD has found some support around $2,709, the base of a former range. However, the overall trend is down, with the precious metal in a short-term downtrend. The principle “the trend is your friend” suggests that gold could face further declines in the near term. Should it fail to maintain support at this level, the next key target could be lower.
As the market turns its focus toward the expected Trump presidency and its implications for the US economy, the dynamics driving gold prices are shifting. With capital flowing out of bonds and commodities and into the US Dollar, Bitcoin, and stocks, it seems that the era of gold’s dominance as a safe-haven asset may be taking a backseat.
As investors continue to digest the implications of Trump’s near-certain victory, gold’s struggle to regain its shine could mark the start of a new era in the market, where riskier assets take center stage.
