This month, with Trump's decisive victory in the election, the American market has experienced a surge. From U.S. stocks to assets like Bitcoin, there is strong performance across the board; however, gold has been an exception, recording the worst performance since the thirteenth US presidential election. According to Deutsche Bank data, in the two days following Trump's victory, gold prices plummeted, having dropped nearly 7% since election day. This decline stands in stark contrast to the heated performance of other assets.
Why Has Gold Cooled Off?
Gold is traditionally viewed as a safe-haven asset, with its demand typically increasing when concerns about economic or geopolitical risks intensify. However, this election did not result in the expected electoral controversy or political stalemate, but rather a sweeping victory for the Republicans. Trump's clear win reduced safe-haven sentiment, causing investors to shift funds from gold and other safe assets to the stock market and other high-risk areas.
Additionally, the strong performance of the dollar has also pressured gold. The significant rise of the dollar directly weakens the price of dollar-denominated gold. Meanwhile, with stable U.S. economic data and no further rate cut signals from the Federal Reserve, gold’s appeal has diminished further.
The Market Impact of Trump's Policies
Trump's proposed policies on tax cuts, financial deregulation, and tariffs are seen by the market as beneficial for U.S. stocks and domestic industrial companies. This agenda has attracted considerable attention from hedge funds, with major banks, energy, and manufacturing-related stocks being eagerly pursued. In comparison, the short-term demand for gold as a safe haven has significantly decreased.
Nonetheless, in the long run, the uncertainties brought by Trump's policies still exist. Trump is known for his unpredictable statements and decision-making style, and any potential policy fluctuations or tense international relations could reignite market demand for gold as a safe haven.
Is Gold Still Worth Buying?
Analysts indicate that despite the current downtrend in gold prices, it does not mean the demand for safe-haven assets has vanished completely. Long-term geopolitical risks and economic cycle fluctuations may still support gold. Investors must cautiously weigh the allocation ratio of risk assets to safe-haven assets in the current environment and pay attention to key events that might shift market sentiment in the future.
In summary, the weak performance of gold following Trump's election reflects more the retreat of short-term safe-haven sentiment. In the future, as economic and policy uncertainties increase, the role of gold as a safe-haven asset should not be overlooked.
