Spot gold declined 0.1% to $2,656.34 per ounce after reaching its lowest level since October 15 earlier in the session
Gold prices hit a more than three-week low on Thursday, as the dollar firmed after Donald Trump’s win in the U.S. presidential election, while focus was also on the Fed’s interest rate decision later in the day.
Spot gold declined 0.1% to $2,656.34 per ounce, as of 0327 GMT, after reaching its lowest level since October 15 earlier in the session.
Bullion touched a record high of $2,790.15 last week and has dropped more than $130 since then.
U.S. gold futures tumbled 0.5% to $2,663.60.
The dollar index hovered near a four-month high, making bullion more expensive for overseas buyers.
Trump returned to the White House with a sweeping victory on Wednesday, but it has fuelled questions about whether the Federal Reserve may proceed to cut rates at a slower and smaller pace.
Traders are expecting a 25 bp cut likely to be announced at the end of the Fed’s meeting later in the day, with focus also being on Chair Powell’s statement for any guidance on the central bank’s future rate-cut path.
Trump’s potential policy is inflationary and that could translate to slower cuts, which is a rather negative news for gold, but a widening U.S. budget deficit and reduced fiscal discipline will be positive, said Kelvin Wong, OANDA’s senior market analyst, Asia Pacific.
Bullion is considered a hedge against geopolitical and economic uncertainties but higher rates raise the opportunity cost of holding zero-yield bullion.
I still think gold’s path remains bullish as people would like to buy it as a safe-haven to shield against risks. Still expect prices to reach $3,000 next year, according to Peter Fung, head of dealing at Wing Fung Precious Metals.
