US Election Fallout: Why Gold Prices May See a Short-Term Retracement; A Look at Gold Price Trends During the President’s Presidency

Gold prices in India extended losses on Thursday, reflecting global weakness in the yellow metal after a sharp pullback triggered by Republican Donald Trump’s victory in the 2024 US election. Analysts expect gold prices to face further pressure in the short term as political and economic factors affect gold’s safe-haven appeal.

MCX gold prices fell more than 4%, or about $3,400 per 10 grams, down from all-time highs, while silver corrected 10%, or approx. $10,000 per kilogram, higher than the peak in late October. International gold hit a record high of $2,790.15 last week and has since fallen by more than $120.

“After three months of gains, gold remains overbought and this correction has arrived. A surge in the U.S. dollar following Trump’s election, expectations of a slower pace of Fed rate cuts, easing geopolitical tensions in the Middle East and year-end profit bookings have all contributed to The adjustment of gold price.

Kedia expects this adjustment to continue in the short term due to a combination of economic and political factors.

Investors will focus on the Federal Reserve policy meeting and interest rate decision today. Traders expected the Federal Reserve to cut interest rates by 25 basis points later in the day, focusing on Chairman Jerome Powell’s comments on guidance for future rate cuts.

Trump’s victory raises questions about whether the Fed may continue to cut interest rates at a slower, smaller pace. The prospect of multiple U.S. interest rate cuts has supported gold’s record rally this year.

Where will gold prices go?

Kedia noted that rising gold prices have slowed physical buying in India, with barter increasing and old gold re-entering the market. In addition, Bitcoin and stock markets rose following Trump’s victory, leading to pressure on gold profits amid a shift in investment focus.

“Historically, we have seen short-term corrections in gold prices due to U.S. election results in the past. At the same time, the gold-to-copper ratio is also declining, which indicates that market uncertainty has eased. Year-end profit bookings and portfolio restructuring will also weigh on gold prices. Therefore, we expect gold prices to continue falling in the coming months,” Kedia said.

According to him, MCX gold price may drop to $74,000 – 74,500 levels, MCX silver price may fall to $It will reach 87,000 – 88,000 in 1-2 months.

Gold has plunged more than $125 in the past 24 hours and is trading around $2,670, very close to the 50-day moving average around $2,653, noted Sandip Raichura, CEO of Retail Brokerage and Distribution and Director of PL Brokerage and Distribution.

“As the U.S. dollar strengthens, gold, which is inversely related to gold, is bound to fall, so today’s Fed meeting is very important for the future direction of bonds and the U.S. dollar. On the one hand, pre-election rhetoric shows that U.S. yields are strengthening, growth and Incremental data is unlikely to change the trajectory the central bank wants to take and will act as a counterattack, so some bumps are expected over the next 2-3 weeks, possibly even until the president-elect takes office in January.

He said gold prices are still in an uptrend, but reiterated that strict stops are necessary, especially if the pivot point around $2,600 is challenged, as that would mark a major breakout. By then, he expects the dollar’s initial knee-jerk reaction may be reversed, especially if President Trump talks about higher deficits that could weigh on the greenback.

Here’s how gold prices have performed under every U.S. president since 2000.

Gold prices return under different U.S. presidents

Historical trends show that gold prices typically undergo short-term corrections following the U.S. election results, but tend to rise in the long term. Data shows that gold has posted positive returns in five of the past six presidential terms.

The table above shows data compiled by Kedia Advisory illustrating the historical movement of gold prices during U.S. presidential terms since 2000. It compares the price of gold from the start of each election month until the end of the term or before the next election. According to these terms:

– Gold prices experienced positive growth in five of the six periods.

– The highest increase occurred during Obama’s first term (2008-2012), with an increase of 137.13%.

– The only decline was during Obama’s second term (2012-2016), when gold prices fell by 29.97%.

– Other terms have risen steadily, with returns ranging from around 46% to 60%, reflecting gold’s long-term trend of performing well in different political environments.

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Disclaimer: The above views and recommendations only represent the views and recommendations of individual analysts or brokerage firms and have nothing to do with Mint. Investors are advised to consult a certified expert before making any investment decisions.