(Bloomberg) — Donald Trump’s victory immediately buoyed markets from stocks to Bitcoin. Gold is going to take a lot longer to turn things around.
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In the two days immediately following the Republican candidate’s win, the precious metal’s performance was the worst in at least 13 US presidential election windows, according to Deutsche Bank. Gold prices have dropped almost 7% since Election Day, even as several other asset classes enjoy a post-campaign boost.
“When people get really interested in gold is when nothing else is working,” said Rob Haworth, senior investment strategy director at US Bank. “Equities are working well; you’re even seeing solid returns for low-quality corporate credit. So you’re less likely to seek out alternative sources of portfolio growth.”
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Gold’s slide is a marked turnaround for a commodity that had surged by more than 30% in the year leading up to the US vote, hitting record after record as geopolitical and economic risk drew investors in. Although longer-term uncertainty remains in place, with Trump known for his at-times wildcard positions, much of gold’s safe-haven appeal apparated after the most bullish scenario for gold — a contested election — failed to materialize.
A rallying dollar in the days since Trump’s re-election is also negative for bullion as it’s priced in the US currency. At the same time, the US economy appears to be in pretty good shape, with inflation easing and the Federal Reserve not in a rush to keep lowering interest rates.
With the rest of the US economy looking so strong right now, “gold would be a contrarian call,” said Matt Miskin, co-chief investment strategist at John Hancock Investment Management. “The sentiment right now is there’s very little risk, whether it’s fundamentally, geopolitically. These types of environments, it’s not easy to go against momentum.”
Some investors may not personally agree with the President-elect’s platform, but just knowing what to expect during Trump 2.0 has helped remove some of the recent uncertainty that helped propel the precious metal to new highs. The confirmation of a Republican clean sweep also means there’ll be more leeway to carry out the policies he telegraphed on the campaign trail. Trump’s agenda, ranging from tax cuts to financial deregulation to tariffs, has hedge funds piling into sectors that could benefit, including large-cap banks and domestic industrials.
