Following President-elect Trump’s sweeping victory, the gold market has shed some of its previous gains. While this slight dip might worry newcomers, seasoned investors are taking full advantage of the opportunity.
In this week’s The Gold Spot, Sr. Precious Metals Advisor Steve Rand and Precious Metals Advisor Joe Elkjer will explain what’s happening with gold prices, what experts are predicting, and which fundamentals have remained unchanged.
Why are gold prices falling?
Gold has been on a record-shattering tear throughout most of 2024. Since the presidential election, the yellow metal has slowed, leading many people to wonder why gold prices are falling. In reality, the metal has only retreated around 5% since the election*. A quick look at history adds some essential context to this slight pullback.
After Trump’s initial victory in 2016, gold prices fell by 11.6%, nearly double the current decline. Over the next four years of his presidency, gold surged by over 54%.
Even with a strong economy through most of his tenure, gold prices still rose 54%.
When zooming out, this minimal slump is nothing more than a blip on the radar of a much larger upward climb. Gold is still up 26% year-to-date* and remains within spitting distance of all-time highs.
“People really need to understand, this dip is not necessarily a political thing. It’s more a gauge of people getting antsy for a bit.”
Steve Rand
General Manager / Sr. Precious Metals Advisor
Big Banks Say “Buy the Dip”
The charts aren’t the only indicators of gold’s positive outlook. Amid temporary declines, big banks are remaining steadfast in their calls for higher prices. Recently, many financial bigwigs have actively encouraged investors to buy the dip. Both Citi and UBS advise that $2,600 is an excellent entry point in this sustained bull market. JP Morgan described the price softening as a “stumble, not a sea change” to underscore the metal’s overarching confident price movement. Gold price predictions remain strong, with many banks calling for $3,000 in 2025.
Gold’s Fundamentals Remain
Trump’s presidency is poised to shake up the status quo in many ways, but some factors fall outside even the president’s reach. The most influential drivers of gold’s unprecedented surge will likely remain active throughout his term.
De-Dollarization — A combination of dollar weaponization and weakness has pushed countries away from the greenback. This shift has culminated in a concerted and multilateral effort to shed the dollar’s influence globally. Gold has risen as the de facto replacement for the world reserve currency to stabilize local economies and currencies.
Geopolitical Tensions — The “world is on fire”, to steal a Trump phrase, with a years-long stalemate in Ukraine and a regional war in the Middle East. As these and other geopolitical tensions threaten to escalate, safe-haven demand is on the rise, with investors choosing physical gold over fiat currencies.
Debt Burden — The US economy sits on top of a $35 trillion grenade threatening to go off at any moment, and Trump doesn’t have the kill switch. The president-elect approved $8.4 trillion of debt during his first term, and the Committee for a Responsible Federal Budget estimates his bold economic proposals for a second term would set the country back another $7.8 trillion.
BRICS Nations — The fast-growing BRICS nations are leading the de-dollarization push and the rush into gold. Collectively, these nations own 21.4% of global gold reserves and account for nearly half of the world’s population — a testament to the economic block’s expanding popularity and influence. At the group’s most recent meeting, the BRICS announced plans to create their own precious metals exchange, underscoring their focus on gold.
None of this has changed. These fundamentals are still going to be impacting gold prices.–
Blip on the Radar
Gold’s current slump is nothing but a blip on the radar of the yellow metal’s monumental rally. The post-election volatility is shaking out short-term and speculative investors who never intended to hold for the long run. Central banks, financial institutions, and retail investors around the world remain bullish on gold, providing the essential demand to keep prices moving higher.
“This is a great opportunity to get into the gold market again.”
Joe Elkjer
Precious Metals Advisor
This temporary breather is a solid opportunity to scoop up more gold bars and coins before prices launch again. If you’re not in a position to buy more, holding is the way to go. Selling is a risky move as experts are calling for higher highs. If you have any questions, feel free to reach out to one of our precious metals advisors by calling toll-free at 1-888-812-9892 or using our live chat function.
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*As of November 13, 2024 when this week’s The Gold Spot was filmed.
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