|
Gold fell more than 4% in the four days since Election Day, when
the broad U.S. stock market climbed nearly 4%. That's even
though investors are expecting a Trump White House to drive tax
rates lower and tariffs higher. Such a combination could push
the U.S. government's debt and inflation higher, which are both
things that can help gold's price.
That's left gold at $2,618 per ounce, as of late Monday, down
from a record of roughly $2,800 set late last month. It also
means gold has lost some luster as the best performing
investments of the year. The largest exchange-traded fund that
tracks the price of gold has seen its gain for 2024 drop back
below 27% from nearly 35% a couple weeks earlier.
What's going on? Part of the decline has coincided with the
strengthening of the U.S. dollar against other major currencies.
Tariffs and trade wars instigated by the United States could
push down the value of the euro and other countries' currencies,
and a strong U.S. dollar makes it more expensive for buyers
using those other currencies to purchase gold.
Trump's preference for lower taxes and higher tariffs is also
forcing Wall Street to ratchet back expectations for how many
cuts to interest rates the Federal Reserve will deliver next
year. Fewer rate cuts would mean Treasury bonds pay more in
interest than previously expected, and that in turn could hurt
gold's price. Gold, which pays its owners zero dividends or
income, can look less attractive when bonds are paying more.
Gold, of course, still has its reputation for offering a safer
place for investors when things are shaky around the world.
Whether it's been because of wars or political strife, investors
often flock to gold when they're not feeling confident about
other investments. And with wars still raging in the Middle
East, Ukraine and elsewhere, while political tensions still seem
as high as ever, gold will likely stay in many investors'
portfolios.
“Gold continues to be the safe haven asset class of choice for
both investors and central banks,” according to money managers
at Robeco, which handles investments for big institutional
investors.
All contents © copyright 2024 Associated Press. All rights reserved
|
|
