Precious Metal Prices Fall Further On Strong Dollar, High Treasury Yields

 

Gold and Silver Fall Further On Strong Dollar, High Treasury Yields

(Bullion News Network) – Gold extended its bearish momentum heading into midweek, dropping over $20 and settling near the $2,575 level. This puts the spot price of gold nearly $315 below its recent all-time high – a total drop of over 7.5% since October 30th. Today’s price action also marks five consecutive days of losses for the yellowish precious metal, which rocketed past several all-time highs throughout the year. 

Silver also extended its losses today, dropping $.34 and securing a five-day losing streak for the precious metal, which now hovers at around $30.40/oz. Silver hit a decade-long high last month, reaching $34.86 per ounce on October 22nd. Since then, silver is down by over 12.7%. Bearish trendlines for gold and silver have been highly correlated; the gold-silver ratio remains relatively unchanged today at 84.67:1 and is down less than one point since last Wednesday. 

Market reactions to Donald Trump’s sweeping victory in the U.S. presidential election last week drove the bearish movement for both precious metals to begin the month. Wall Street rallied in the wake of the election result, and the United States Dollar gained strength as markets braced for President-Elect Trump’s tariff plans, which some analysts say could devalue the foreign currencies of other nations. Promises of deregulation for businesses also added fuel to the stock market’s fiery start to November. 

Wall Street’s celebration calmed today, with stocks mostly moving sideways as markets braced for an uncertain economic outlook. Inflation rose by 2.6%, according to October’s CPI report, falling in line with market expectations. These inflation numbers are likely not high enough to prevent the Federal Reserve from executing another rate cut in December as Fed Chair Jerome Powell attempts an economic soft landing to start off 2025. CME Group’s FedWatch tool now anticipates an 82.5% probability that the Fed cuts rates again in December, up from 58.7% yesterday. 

The news did little to derail the bearish trends in gold and silver markets, though. A stronger US Dollar and increasing Treasury yields once again put a dent in the attractiveness of non-interest-bearing assets like gold and silver. The likelihood that President-Elect Trump’s tariff plans cause the Fed to put a pause on its rate-easing cycle as inflation begins to take off could be dampening the traditionally bullish impact of heightened odds for a Fed rate cut, Reuters reports. 

Trump’s Election Has Been Good For Stocks, Bad For Bullion – Will the Trend Hold? 

Precious metals changed course after Trump’s decisive victory on Election Day. After a series of new highs, both gold and silver retreated; Gold dropped 7.5% and silver shed 12.7% since their respective local highs on October 30th and 22nd, respectively. Platinum group metals also performed poorly to open the month, despite platinum and palladium seeing green throughout most of October. The precious metals market has inversely correlated with stock market performance since November 5th. The Dow and S&P 500 closed in on several records in the immediate aftermath of former President Trump’s reelection, but precious metals continued to fall as markets adjusted to a new incoming White House. 

Whether or not these trends will hold remains to be seen. Precious metals have tended to perform better under Republican presidencies than Democratic ones. Concerns that some of Mr. Trump’s policy proposals, including a universal tariff on imported goods, will heighten inflation offer bullish signals for gold and silver, two assets that have historically retained or gained value during inflationary economic climates. 

Some analysts have suggested that this stock market bump is a short-term trend that could reverse once some of the President-Elect’s policies are passed. Precious metal prices dropped again today, and a slowdown in stock market momentum suggests that the initial bullishness may not become a permanent fixture of American market sentiment heading into a new year – and a new administration.