KEY POINTS
- The largest gold ETF saw over $1 billion in outflows post-election.
- Trump’s win strengthened the dollar, reducing demand for gold.
- Gold prices hit a one-month low as investors booked profits.
The world’s largest gold-backed exchange-traded fund, SPDR Gold Shares (GLD), witnessed its most significant weekly outflow in over two years as Donald Trump’s recent election win fueled investor profit-taking.
Following the decisive outcome, traders pulled over $1 billion from the fund, marking the biggest weekly outflow since July 2022, according to Bloomberg data.
Spot gold prices fell 1.9 percent during the same period, with overall gold ETF holdings dropping 0.4 percent, the second consecutive weekly decline.
Trump’s win shifts market sentiment
Usually investors consider gold as a standard for safety when political and economic unrest is expected and therefore in October business expectations were high since there was anticipate for the presidential election dispute in the United States.
Yet, when Trump won and the Republicans gained control of the Senate, the market mood changed quite fast.
According to Mining.com, with the election outcome bringing clarity, investors opted to exit their positions, seizing profit opportunities.
“Trump’s win not only boosted U.S. equities but also strengthened the dollar, both of which made gold less appealing to investors holding other currencies,” said a market analyst.
Additionally, Trump’s stance on digital assets and the prospect of a pro-crypto Congress further elevated interest in alternatives like Bitcoin, pushing some investors away from traditional assets like gold.
Gold prices and miners tumble
The market adjustment continued into Monday as gold traders took profits, driving prices down to a one-month low. Gold mining stocks also faced declines as the broader market embraced risk assets.
With a strong dollar and rising equities, traders saw limited upside in holding gold in the short term.
Increased clarity around U.S. economic policy and a solid dollar are expected to continue putting pressure on gold.
However, analysts suggest that while gold is experiencing a temporary setback, it may still attract demand from investors anticipating future economic uncertainties.
