Movement away from gold after the election is thought to be temporary. Gold may benefit from the potential “chaos grenade” and other “aligned stars.”
One of the most momentous elections in recent U.S. history is over, and analysts are sharing opinions about how gold may do in the aftermath.
For more than 5,000 years, gold has shown a legendary resilience and has come to be seen as a dependable medium of exchange.[1]
In the most recent modern era, gold proved its worth by climbing 35% from the beginning of January 2024 through the end of October (to $2,800 per ounce).[2]
Since the early months of 2022, even though the Federal Reserve was strictly tightening rates, gold still rose 53% and was considered a best-performing asset.[3]
The election interfered with this growth for gold. By November 14, 2024, gold was down about 6% from its price right before the election.[4] The continued decline made some investors feel less confident about gold’s future as a top performing asset.
This article lists the three “fundamental drags” some analysts believe are influencing gold right now and looks at why strategists believe the outlook for gold is, overall, positive.
Gold’s Election-Uncertainty Premium Reduced by Quick Decisive Victory
Gold had already dropped by a modest $50 per ounce as of October, 30, 2024, going from $2,800 per ounce to $2,750. Some saw this as simply “profit-taking.”[5] And then after the election the metal declined by almost $200 per ounce.[6]
Here are the three reasons analysts collectively believe the election triggered a drop in gold prices (see more details in the full article – link at top of this page):
- Trump’s planned tax cuts and spending increases will exacerbate the national debt, send yields higher, and strengthen the dollar.
- Election uncertainty went away with the decisiveness of Trump’s victory.
- Trump expects to create a less constrained regulatory environment.
A market analyst at City Index and Forex.com, Fawad Razaqzada, told Marketwatch, “Gold’s decline against the backdrop of Trump’s victory marks a shift in sentiment, with some investors now choosing to diversify away from safe-haven assets.”[7]
On the other hand, regarding the gold outlook, Razaqzada emphasizes that the trend is likely to be a “temporary obstacle, and the long-term gold forecast remains bullish in light of ongoing rate cuts by central banks.”[8]
In fact, virtually all the same factors that drove gold higher in recent history remain intact and are expected to sustain the yellow metal in the coming months and years. Those drivers of gold include monetary-policy, economic, fiscal, and geopolitical conditions.
Gold Likely to Keep Bullish Character Analysts Say
Some who are paid to watch and assess precious metals think gold’s woes recently are akin to a “speed bump” on the road ahead. Here are some of their comments:
- The current drop in gold is “a very temporary blip in what will continue to be a massive bull market for gold.”[9] Macroeconomic analyst Stephanie Pomboy
- Once the post-election dust settles, the market likely will “once again focus on geopolitical tensions, concerns about the Chinese and European economies, soaring global debt levels, ongoing central bank gold buying, and the political uncertainty in Germany and Japan.”[10] Peter Grant, vice president and senior metals strategist, Zaner Metals
- “Gold prices’ slide in response to Tuesday’s election results could be a head fake.”[11] Barron’s senior writer Ian Salisbury
- “We are still relatively constructive on gold. Why does gold go up? It’s geopolitical uncertainty, it’s deficit spending, and it’s inflation. Right now all those stars are aligned.”[12] Taylor Krystkowiak, investment strategist at Themes ETFs
From inflation to geopolitical uncertainty, the prospect of a second Donald Trump presidency makes a case for gold look even stronger.[13]
Gold Outlook: New Trump Era May Bring with It “a Bit of a Chaos Grenade.”
In addition to the fundamentals still being in place for gold, some are saying there is an extra portion of unpredictability that comes from the personal unpredictability of Donald Trump. [14]
Krystkowiak says, in his opinion, “It’s a little bit of a chaos grenade.” And gold historically has loved chaos.[15]
No one can say for sure what will happen, but for investors who still see gold as a “safe-haven” investment that is smart to add to their portfolios, a tax-advantaged gold IRA makes it safe and easy. (Always consult with a qualified advisor to understand personal tax implications.) We’ll keep an eye on the gold outlook as we move closer to Trump’s assumption of office and keep you informed.
[1] Steve Goldstein, MarketWatch, “Gold is setting records dating back over 5,000 years — against silver” (March 17, 2020, accessed 11/14/24).
[2] CNBC.com, “Gold COMEX (Dec′24)” (accessed 11/14/24).
[3] StockCharts.com (accessed 11/14/24).
[4] CNBC.com, “Gold COMEX (Dec′24).”
[5] Ibid.
[6] CNBC.com, “Gold COMEX (Dec′24).”
[7] Saefong, “Why gold prices are now dropping.”
[8] Ibid.
[9] Anna Golubova, Kitco, “Can the U.S. survive its debt? The ‘doom loop’ trap, gold’s & dollar’s future under Trump – Stephanie Pomboy” (November 6, 2024, accessed 11/14/24).
[10] Saefong, “Why gold prices are now dropping.”
[11] Ian Salisbury, Barron’s, “Ignore the Selloff in Gold. Trump’s ‘Chaos Grenade’ Win Will Bring Gains.” (November 11, 2024, accessed 11/14/24).
[12] Ibid.
[13] Ibid.
[14] Salisbury, “Ignore the Selloff in Gold.”
[15] OMFIF.org, “Geopolitical Upheaval Emphasizes Gold’s Vital Role” (accessed 11/14/24)
