Gold price collapses, fails to rally after Trump’s win

Gold prices collapsed to a five-and-half-month low on the afternoon of Friday November 11, with risk appetite growing and demand for safe-haven assets fading.

The spot gold price was recently quoted at $1,227.40/1,227.85 per ounce, down $33 on Thursday’s close. The metal has ranged from $1,226.40 per oz – its lowest since June – to $1,265.43 so far today.

Gold prices are down more than $100 from the Wednesday spike high of $1,337.50 per oz – Donald Trump’s upset victory in this week’s US presidential election was expected to trigger a surge in the gold price.

“Panic has subsided and the gold market continues to price in the prospect of a December rate rise. Rising bond yields have weighed on safe-haven demand… risk-on sentiment is here to stay until at least the end of the year,” Metal Bulletin analyst Andy Farida said.

Market participants widely expect the Federal Reserve to raise US interest rates at its December meeting.

According to the CME Group’s FedWatch tool, the probability of the Federal Reserve lifting rates next month has returned to 80%. It had plunged to below 50% in the immediate wake of Trump’s election.

As well, ETF investors have started to liquidate, reducing their exposure by 18.89 tonnes as of November 10. Given the mounting evidence stacked against higher gold prices, ETF investors may very well cut their holdings further; if so, gold may come under renewed selling pressure.

In the other precious metals, the spot silver price slumped to $17.420/17.465 per oz, down to $1.60 and a three-week low. Platinum at $939/944 per oz was down $3, also its lowest in three weeks, while palladium at $674/679 per oz was down $14.

(Editing by Mark Shaw)

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