Gold falls after sweeping Trump win boosts dollar

Gold prices fell 2% overnight after Donald Trump won the United States presidency in an election victory that swept across the nation with more support than his 2016 win.

Bullion fell to US$2,689.98 per oz. on Wednesday morning as the spot value of the U.S. dollar grew by the most since 2020, according to BMO Capital Markets. It was gold’s first drop below US$2,700 per oz in two and a half weeks.

“We see gold as likely to be the funding source for portfolio rotation in the near term, but given the de-dollarization of trade is set to accelerate, we still see emerging market support over the coming years,” Colin Hamilton, BMO director of commodities research, said in a note on Wednesday.

While Trump’s proposed policy of increasing tariffs to discourage imports may initially be offset by expected Chinese economic stimulus, looming global trade conflict would trouble commodities markets, Hamilton said.  

“We expect some renewed interest in bulk commodities through year-end given expectations of a stronger Chinese fiscal package to offset any impact from higher tariffs,” he said.