Gold prices plunged to a three-week low on Wednesday, dipping below $2,700 per troy ounce, as investors flocked to the U.S. dollar following Donald Trump’s win in the 2024 U.S. presidential election. The former president’s victory boosted the dollar and U.S. Treasury yields.
Trump’s decisive win, coupled with a Republican sweep of both the Senate and House, has eased market uncertainties and fueled the so-called “Trump trade.” As a result, U.S. equities soared to record highs, the dollar reached a four-month peak, and the 10-year Treasury yield surged 16 basis points to 4.437%.
Investors are now weighing the impact of Trump’s proposed policies, including potential tariffs, tax cuts, and a wider fiscal deficit—factors that may challenge the Federal Reserve’s efforts to combat inflation.
The dollar surged on Wednesday after Republican Donald Trump won the U.S. presidential election with his party also took control of the U.S. Senate. The status of the House of Representatives remained uncertain. The dollar index was on pace for its biggest gain since September 2022 as inflation and tariff concerns lifted Treasury yields.
Further, The euro slid 2% to a four-month low on fears of potential U.S. tariffs before paring losses ahead of an expected rate cut by the Fed on Thursday.
European Central Bank policymaker Francois Villeroy de Galhau said Trump’s victory means there will be more downside risks to the global economy while ECB Vice President Luis de Guindos warned about the potential implications of a trade war.
Now, Investors have to closely watch the Federal Reserve policy decision scheduled later today, with expectations of a 25-basis-point rate cut to the 4.50%-4.75% range. The Fed’s approach may either cushion gold’s losses or drive further declines, depending on its stance on easing..
Technical Outlook – Gold Futures
Gold prices experienced a sharp drop of over 2% on Wednesday, marking the largest intraday decline since July 23, 2024. Prices hit an intraday low of 76,367 before settling at 76,535, forming a long bearish candlestick that signals strong selling pressure.
On the chart, prices are shaping an ABCD pattern, with the recent decline from last week’s low forming Point D. This pattern suggests potential downside momentum, with support expected at 75,800–75,250.
Hence, any rise towards 77,000-77,500 could add pressure in the prices, while on the downside a fresh break down expected below 76250. Downside target expected 75,800-75,250 with immediate resistance lies at 78,720-79,850.
Until then, Happy Trading!
Commodity Samachar Securities
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