Gold dumped for riskier options as Trump nears finish line

Source Fxstreet
  • Gold goes out of favor as capital piles into the US Dollar, Bitcoin and Stocks. 
  • Donald Trump is now expected almost certainly to be the next US President. 
  • Technically, XAU/USD extends its short-term downtrend to key support. 

Gold (XAU/USD) trades down by half a percent in the $2,720s on Wednesday due to the US Dollar (USD) strengthening after current results from the US presidential election show Republican nominee Donald Trump on 267 electoral votes, only three short of a victory. Vice President Kamala Harris, meanwhile, is trailing Trump on 224, according to the Associated Press. USD is gaining due to the market view that Donald Trump’s economic agenda and tariffs will strengthen the US Dollar. This, in turn, is negative for Gold since it is mainly priced and traded in USD. 

Investors’ preference for other riskier assets, including Bitcoin (BTC) and equities, also sees flows exiting Gold. 

The uncertainty surrounding the election right up until the end was a driver of safety flows into Gold, which was partly responsible for keeping Gold’s price close to its record highs last week. However, now that the result is almost confirmed, have diminished. 

Trump’s claims that he can end the conflicts in the Middle East and Ukraine, though seemingly exaggerated (“I will have that (Ukraine-Russia) war settled in one day – 24hrs,” Trump said once), could also be reducing safe-haven flows into Gold. 

Gold losses out as Trump trade fully materializes  

Gold loses out to the US Dollar, Bitcoin and US stock index futures as markets celebrate the expected victory of Donald Trump in the US presidential election.

The US Dollar Index (DXY) rose over 1.3% to a peak of 105.32 on Wednesday as it became clear Trump was almost certain of winning. 

US stock futures were also up on the news, with the S&P 500 futures contract up 2.2% at 5,909 in pre-market trading and the Dow 30 futures contract up over 1.3% to 42,770, as markets rejoiced in anticipation of Trump’s likely lower tax agenda. 

Likewise, Bitcoin rose to a new all-time high of $75,407 due to the looser regulatory environment for crypto promised by Trump. 

The pivot back into the US Dollar, Bitcoin and stocks, however, saw capital flow out of bonds and commodities, with US Treasuries, Gold, Oil, Silver and Copper all falling.

Technical Analysis: XAU/USD finds support at key level

Gold falls to support at $2,709, the base of a former range, as it trends lower. The precious metal is probably now in a short-term downtrend and, given the principle that “the trend is your friend,” it is vulnerable to further weakness in the near term.

XAU/USD Daily Chart

A break below the range and the daily low at $2,701 would confirm a lower low and further weakness. Such a move would probably fall to the next support level at $2,687, the September 26 swing high.

The Relative Strength Index (RSI) is falling in line with price, suggesting bearish pressure accompanies the downward trend. 

That said, the precious metal remains in an uptrend on a medium and long-term basis, and a material risk remains that it could reverse course and begin rising in line with these broader up cycles. However, there are no technical signs of this happening yet.

A break above the all-time high of $2,790 would re-confirm the medium-term uptrend and probably lead to a move up to resistance at $2,800 (whole number and psychological number), followed by $2,850. 

  

 

Disclaimer: For information purposes only. Past performance is not indicative of future results.
placeholder
Crude Oil Price Forecast: Brent Nears $110 Amid Saudi Pipeline Outage, How Much Further Can Oil Rise?Supply risks in the Middle East continue to heat up, with international oil prices fluctuating at high levels.During Tuesday's Asian trading session, Brent crude futures (UKOIL-F) rose to
Author  TradingKey
8 hours ago
Supply risks in the Middle East continue to heat up, with international oil prices fluctuating at high levels.During Tuesday's Asian trading session, Brent crude futures (UKOIL-F) rose to
placeholder
【Daily Brief】10-year Treasury yield briefly tops 5%, S&P 500 slips to 7,602 and the dollar firms at 99.3 as the Fed's decision eve beginsThe 10-year Treasury yield touched 5.014% on Monday — its first print above 5% since October 2023 — while the S&P 500 closed 0.48% lower at 7,619.98 and the dollar index firmed to 99.3. Here is the full market wrap ahead of Wednesday's FOMC decision, the dot plot and the August retail sales report, plus today's CLARITY Act Senate vote.
Author  Irene Q.
8 hours ago
The 10-year Treasury yield touched 5.014% on Monday — its first print above 5% since October 2023 — while the S&P 500 closed 0.48% lower at 7,619.98 and the dollar index firmed to 99.3. Here is the full market wrap ahead of Wednesday's FOMC decision, the dot plot and the August retail sales report, plus today's CLARITY Act Senate vote.
placeholder
Gold falls below $4,300 as higher US yields bolster Fed rate hike betsGold price (XAU/USD) tumbles to near $4,295 during the early Asian session on Tuesday. The precious metal faces some selling pressure as rising bond yields and surging energy prices strengthen expectations that the US Federal Reserve (Fed) will raise interest rates this week. 
Author  FXStreet
15 hours ago
Gold price (XAU/USD) tumbles to near $4,295 during the early Asian session on Tuesday. The precious metal faces some selling pressure as rising bond yields and surging energy prices strengthen expectations that the US Federal Reserve (Fed) will raise interest rates this week. 
placeholder
Silver Price Forecast: XAG/USD falls to near $63.50 amid Fed hike bets, higher oil pricesSilver price (XAG/USD) loses its gains from the previous day, trading around $63.50 per troy ounce during Asian hours on Monday. Non-yielding Silver is currently facing significant headwinds driven by rising Federal Reserve (Fed) rate-hike expectations for the upcoming September decision.
Author  FXStreet
Yesterday 10: 37
Silver price (XAG/USD) loses its gains from the previous day, trading around $63.50 per troy ounce during Asian hours on Monday. Non-yielding Silver is currently facing significant headwinds driven by rising Federal Reserve (Fed) rate-hike expectations for the upcoming September decision.
placeholder
Fed hike odds near 90% into Wednesday's decision — how to trade the dollar, gold and the S&P 500A 0.3% monthly core CPI print has lifted the market-implied probability of a 25bp Fed hike on 16 September to roughly 86.5% ~ 90%, which would be the first increase since July 2023. Here is the decision timeline, the pricing versus the forecasts, both scenarios, and the key levels for the dollar, gold and the S&P 500.
Author  Suzie
Yesterday 07: 49
A 0.3% monthly core CPI print has lifted the market-implied probability of a 25bp Fed hike on 16 September to roughly 86.5% ~ 90%, which would be the first increase since July 2023. Here is the decision timeline, the pricing versus the forecasts, both scenarios, and the key levels for the dollar, gold and the S&P 500.
Related Instrument
goTop
quote