Gold News: Trump Win Drives Dollar Rally—Fed Rate Cut May Not Save Gold

Gold Plunges as Dollar Surges on Trump Victory, Market Eyes Fed Rate Decision

Gold prices are falling sharply on Wednesday, as traders lock in profits amid a stronger U.S. dollar and surging Treasury yields following Donald Trump’s projected return to the White House. The sell-off in gold pushed prices through a key technical support level of $2,708.76, shifting the trend downward and further pressured the metal by breaking below the $2,697.28 pivot level. Gold now faces a critical test near the 50-day moving average at $2,636.66 as markets await the Federal Reserve’s policy announcement on Thursday.

At 13:52 GMT, XAU/USD is trading $2662.66, down $81.25 or -2.96%.

Trump Victory Pushes Dollar Higher, Gold Under Pressure

The dollar’s rally to a four-month high has added significant pressure to gold. Fueled by Trump’s projected victory and Republican gains in Congress, the greenback appreciated 1.4%, while the ICE U.S. Dollar Index marked its strongest level since July. The dollar also saw notable gains against the Mexican peso, Swiss franc, and other major currencies, making gold more expensive for international buyers and reducing its appeal as a non-yielding asset.

In response to Trump’s win, investors expect a renewed focus on tariffs and fiscal stimulus, both of which could bolster the dollar further if implemented. Analysts like Paul Christopher of Wells Fargo note that potential trade levies might boost domestic business activity, which could strengthen the dollar, pressuring gold prices further.

Treasury Yields Surge as Bond Markets Brace for Inflationary Policies

Bond markets reacted sharply to Trump’s election, with the 10-year Treasury yield leaping to 4.47%, its highest since July. Rising yields reduce gold’s appeal by increasing the opportunity cost of holding non-interest-bearing assets like gold. The market also anticipates inflationary pressures from potential fiscal spending and tax cuts, which Republicans could advance in a Congress under their control. According to finance professor Jeremy Siegel, a Republican sweep may bring economic growth policies that drive bond yields higher and elevate inflation concerns.

The spike in Treasury yields could weigh on the Federal Reserve’s rate decision on Thursday. Although markets expect a 25 basis point rate cut, any indication of a pause or slowdown in cuts would further pressure gold, already sensitive to rising rates and a stronger dollar.

Outlook: Bearish Trend for Gold as Dollar and Yields Rise

With a stronger dollar and rising yields, gold faces immediate downside risk, likely extending toward the 50-day moving average at $2,636.66 if the Federal Reserve signals a more cautious stance on future rate cuts. As the market assesses the Fed’s language and the inflationary risks posed by Trump’s policy agenda, a bearish outlook on gold persists in the near term. If yields continue upward and the dollar maintains its strength, gold could struggle to recover above recent support levels, leading to further downside potential in the days ahead.