The price of gold has reached a two-month low at $2543, losing over 7% in the first week following the U.S. presidential election. At the time of writing, the metal is trading at $2561.
“The bull market in gold and silver has paused, which may last for a couple more weeks,” commented Citi’s head of commodity research, Maximilian Layton.
In his view, Donald Trump’s rise to power with promises of tax cuts and a stronger dollar has prompted investors to shift capital from precious metals to equities.
The cryptocurrency market also reacted with growth, and the correlation between bitcoin and gold prices fell to an 11-month low of -0.36.
Nevertheless, the expert noted that the fundamental qualities of metal as a safe-haven asset remain relevant. The new U.S. administration’s policies, including Trump’s proposal to increase import tariffs, raise concerns among investors, leading them to buy gold to hedge risks.
Due to rising geopolitical tensions and uncertain economic prospects, demand from central banks in the U.S. and other countries will also remain high, according to analysts at Canaccord Genuity.
Back in the run-up to the U.S. presidential election, JPMorgan analysts predicted that Trump’s victory would lead to a rise in cryptocurrencies and gold.