The subsequent day, gold rebounded and closed at $2,750. The day after that, gold continued its upward trend and closed at $2,760. On the last day of trading before the election, gold closed at $2,744.
The Election and Gold Prices: A Volatile Ride
The 2024 US presidential election was a highly anticipated event that saw a significant impact on the gold market. The outcome of the election, which was won by Donald Trump, led to a surge in gold prices in the days following the election. However, the gold market experienced a significant downturn in the days leading up to the election, with prices plummeting 3.0% on the day after Trump’s big win was apparent. Key factors contributing to the pre-election volatility: + Uncertainty surrounding the election outcome + Fear of a potential Trump presidency + Market expectations of a potential trade war + Concerns about the impact of a Trump presidency on the global economy
The Pre-Election Volatility
The days leading up to the election saw a significant increase in gold prices, with the metal reaching its latest nominal record high four trading days before the election.
The subsequent decline was attributed to the uncertainty surrounding the Trump presidency.
The Market’s Reaction to Trump’s Victory
The unexpected outcome of the presidential election sent shockwaves through the financial markets. Investors and traders were caught off guard by the result, leading to a period of high volatility. The Dow Jones Industrial Average plummeted 1,047 points, or 3.9%, in the first trading day after the election. The S&P 500 also fell, losing 3.1% of its value. Key statistics: + Dow Jones: -3.9% + S&P 500: -3.1% + Gold: -5.2%
The Role of Gold in the Trump Presidency
Gold’s decline was closely tied to the uncertainty surrounding the Trump presidency. Investors were concerned about the potential impact of Trump’s policies on the economy and global markets. The uncertainty surrounding the presidency led to a decrease in investor confidence, causing gold prices to fall.
The correction was largely driven by the uncertainty surrounding Trump’s presidency and the potential for protectionist policies that could negatively impact global trade.
The Uncertainty Surrounding Trump’s Presidency
The uncertainty surrounding Trump’s presidency was a major factor in the decline of gold prices. Investors were concerned about the potential for protectionist policies, such as tariffs, that could disrupt global trade and negatively impact the value of gold. This uncertainty was fueled by Trump’s campaign promises, including his vow to impose tariffs on imported goods and his criticism of the North American Free Trade Agreement (NAFTA). Trump’s economic policies were seen as a threat to the global economy, and investors were worried about the potential for a trade war. The uncertainty surrounding Trump’s presidency was exacerbated by his appointment of a protectionist economic advisor, Peter Navarro. The market’s fear of a trade war was further fueled by Trump’s decision to withdraw from the Trans-Pacific Partnership (TPP) and the renegotiation of NAFTA.
The Impact of Protectionist Policies on Gold Prices
The potential for protectionist policies was a major concern for gold investors. Protectionist policies, such as tariffs, can lead to higher prices for imported goods, which can increase the cost of production for companies that rely on imported materials. This can lead to higher prices for consumers, which can negatively impact the value of gold. Higher prices for imported goods can lead to higher production costs for companies that rely on imported materials. The potential for protectionist policies was seen as a threat to the global economy, and investors were worried about the potential for a trade war.*
The Role of Central Banks in Shaping Gold Prices
Central banks play a significant role in shaping gold prices.
Speculators fuel price volatility in the gold market.
The Speculator-Driven Market
The gold market is heavily influenced by speculators who buy and sell gold futures contracts. These contracts are standardized agreements between two parties to buy or sell a specific amount of gold at a predetermined price on a specific date. Speculators use these contracts to bet on the future price of gold, with the goal of making a profit from price movements. They can use leverage to amplify their potential gains, but also risk significant losses if the market moves against them. Key characteristics of speculator-driven markets: + High leverage + Focus on short-term price movements + Speculators use futures contracts to bet on price movements + Can be volatile and prone to price swings The speculator-driven market is often characterized by rapid price movements, as speculators buy and sell gold futures contracts in anticipation of future price changes.
This is because the leverage is so high that even a small amount of capital can have a huge impact on the price of gold.
The Power of Leverage in Gold Futures Trading
Leverage is a key concept in trading, and it plays a significant role in gold futures trading.
Gold prices surged after Trump’s victory, driven by uncertainty and market volatility.
The Trump Effect: Gold’s Price Movement
Gold prices have historically been volatile, and the 2020 US presidential election was no exception. The outcome of the election had a significant impact on gold prices, with the metal experiencing a significant surge in value.
The price had risen by 15% in the past year alone.
The Rise of Gold: A 15-Year Journey
In the summer of 2016, gold prices were on the rise, reaching an all-time high of $1,365.
Speculators drive gold price movements with massive trades.
The USDX is a widely used benchmark for the dollar’s value against a basket of currencies.
The Rise of Speculators in the Gold Market
The gold market has seen a significant increase in speculative activity in recent years, with speculators playing a crucial role in shaping the price of gold. One of the key indicators of speculative activity is the number of gold-futures contracts held by speculators. According to the Commodity Futures Trading Commission (CFTC), speculators’ gold-futures contracts held are reported weekly.
Weekly Reports and Market Moves
Fed officials are overwhelmingly Democratic, with a strong presence of PhD economists and ties to the Democratic Party.
The Federal Reserve’s Democratic Leanings
The Federal Reserve, the central bank of the United States, has long been perceived as a bastion of non-partisanship. However, a closer examination of its membership and voting patterns reveals a starkly different reality. The Fed is overwhelmingly Democratic, with over 90% of its current 400+ PhD economists registered Democrats.
The Demographics of Fed Membership
The Politics of Rate Setting
Fed officials prize central-bank independence above all else. This means that they prioritize making decisions based on economic data and data-driven analysis, rather than being swayed by political considerations.
The Fed’s Rate Hike Cycle: A Historical Context
The Federal Reserve, the central bank of the United States, has a long history of managing interest rates to promote economic growth and stability. One of the key tools in their toolkit is the Federal Funds Rate, which is the interest rate at which banks and other depository institutions lend and borrow money from each other overnight. When the Fed raises the Federal Funds Rate, it makes borrowing more expensive for banks, which in turn can slow down economic growth.
The Fed’s actions were a major catalyst for this trend, as investors sought to reduce their exposure to gold ahead of the upcoming interest rate hike.
The Gold Rush of 2022
The year 2022 was marked by a significant increase in gold prices, with the spot price rising by over 20% from its 2021 levels. This surge in gold prices was largely driven by the Federal Reserve’s (Fed) decision to raise interest rates in response to inflation concerns. As the Fed increased the federal funds rate, investors began to sell their gold-ETF shares in anticipation of higher interest rates, leading to a sharp decline in gold-ETF holdings.
The Fed’s Rate Hike Cycle
The Fed’s decision to raise interest rates was a key factor in the decline of gold-ETF holdings. The Fed’s rate hike cycle, which began in 2022, was designed to combat inflation and slow down the economy. As the Fed raised interest rates, investors began to sell their gold-ETF shares, expecting that higher interest rates would make gold less attractive as an investment. Key points about the Fed’s rate hike cycle: + The Fed raised interest rates to combat inflation + The rate hike cycle began in 2022 + Investors sold gold-ETF shares in anticipation of higher interest rates
The Gold-ETF Sell-Off
The gold-ETF sell-off was a significant event in the gold market. As investors sold their gold-ETF shares, the holdings of gold-ETFs such as GLD and IAU plummeted.
The Rise of GLD+IAU Holdings
The past few weeks have seen a significant increase in gold holdings across the major gold ETFs, including the SPDR Gold Shares (GLD) and the iShares Gold Trust (IAU). As of Election Day, the total holdings of these two ETFs had reached an astonishing 15.5% of the total gold market, with a total of 183.3 tonnes of gold.
The Impact of the US Election
The surge in gold holdings can be attributed to the uncertainty surrounding the US presidential election. The outcome of the election had a significant impact on the gold market, with prices rising sharply in the days leading up to the election.
The Shift in Fed Rate Expectations
The Federal Reserve’s (Fed) decision to keep interest rates steady in its latest meeting has sent shockwaves through the financial markets. The unexpected move has led to a significant shift in the Fed’s rate expectations, with traders and economists alike scrambling to reassess their forecasts.
Why the Shift? There are several reasons why the Fed’s decision has led to a shift in expectations. One key factor is the change in administration. The Fed has historically been more dovish during Democratic administrations, and the current Democratic administration has been particularly supportive of low interest rates. This has led to a decrease in expectations for future rate hikes. The Fed’s decision to keep rates steady is seen as a sign that the economy is still growing, but at a slower pace than expected.
In mid-September leading into elections, the political Fed not only executed its first rate cut in 4.5 years but made it a crisis-level 50bp one! That outsized cut certainly wasn’t justified economically, but it would goose stock markets. When they rally in the final few months before voting, Americans feel better about the economy really upping the odds the incumbent party will retain the presidency. So a cutting cycle was born! Yet as Trump’s betting-market odds of winning again surged in October, so did the USDX. In just a month out of those lows, it soared 4.0%! The main reason was if Trump managed to pull off a victory, the Democrat-dominated Fed was less likely to cut rates as aggressively. It certainly wouldn’t start hiking, but it could dramatically slow its new rate-cut cycle. So expected Fed rate cuts already collapsed by Election Day.
The Impact of the FOMC on the US Dollar
The Federal Open Market Committee (FOMC) has a significant impact on the value of the US dollar. As the committee responsible for setting monetary policy, the FOMC’s decisions can affect the dollar’s value relative to other currencies.
How the FOMC Affects the Dollar
The FOMC’s decisions on interest rates and quantitative easing can influence the dollar’s value. A decrease in interest rates can lead to a decrease in the dollar’s value, as investors seek higher returns in other currencies. An increase in interest rates can lead to an increase in the dollar’s value, as investors seek to invest in the US economy. ### The Role of the FOMC in Shaping the Dollar’s Value*
The Role of the FOMC in Shaping the Dollar’s Value
The FOMC’s decisions are influenced by a range of factors, including:
Economic indicators such as GDP growth and inflation rates
Global economic trends and events
Market sentiment and expectations
The Impact of the FOMC on the US Economy
The FOMC’s decisions can have a significant impact on the US economy, including:
Inflation: The FOMC’s decisions on interest rates and quantitative easing can influence inflation rates. Economic growth: The FOMC’s decisions can influence economic growth by affecting interest rates and the money supply. Employment: The FOMC’s decisions can influence employment rates by affecting interest rates and the labor market.
The 200dma is a key indicator of the market’s sentiment. When gold is trading above its 200dma, it indicates that the market is optimistic about gold’s future prospects. However, when gold is trading below its 200dma, it indicates that the market is bearish on gold.
The 200dma: A Key Indicator of Market Sentiment
The 200-day moving average (200dma) is a widely used technical indicator in the financial markets. It is calculated by taking the average of the closing prices of the asset over a 200-day period.
Global economic trends and inflation concerns are driving the gold selloff.
The gold price has been under pressure for several months, and the recent price drop has been particularly sharp.
The Gold Selloff: A Global Phenomenon
The gold price has been declining steadily since the summer of 2022, with some analysts predicting a significant selloff. The reasons behind this decline are multifaceted and complex, involving a combination of factors such as inflation, interest rates, and global economic trends.
Key Drivers of the Gold Selloff
Inflation concerns: The Federal Reserve’s decision to raise interest rates to combat inflation has led to a decrease in gold’s appeal as a safe-haven asset. Interest rate hikes: Higher interest rates make borrowing cheaper, which can reduce demand for gold as an alternative investment. Global economic trends: The ongoing global economic slowdown and recession fears have led to a decrease in gold’s price. * Currency fluctuations: The US dollar’s strength has contributed to the decline in gold prices, as a stronger dollar makes gold more expensive for holders of other currencies. ## The Impact of Elections on the Gold Selloff**
The Impact of Elections on the Gold Selloff
The recent elections have added fuel to the gold selloff, as investors have become increasingly risk-averse.
Speculators bet on gold price decline as longs sold surge.
The Rise of Speculators in Gold Futures
The recent surge in speculators’ gold-futures-positioning data has raised eyebrows in the financial community. With 27.7k longs sold in the past two weeks, the market has witnessed a significant shift in sentiment. This trend is reminiscent of the 2016 elections, when a staggering 65.6k longs were sold in the first three weeks after the polls closed.
Key Statistics
7k longs sold in the past two weeks
6k longs sold in the first three weeks after 2016’s elections
7k short positions opened in the past two weeks
6k short positions opened in the first three weeks after 2016’s elections
The Psychology Behind Speculators’ Behavior
Speculators’ behavior in gold futures is often driven by their perception of market trends and sentiment. In the case of the recent surge in longs sold, it is likely that speculators are betting on a decline in gold prices. This is because gold prices tend to rise during times of economic uncertainty, and speculators may be anticipating a decrease in demand or an increase in supply.
Factors Influencing Speculators’ Decisions
Economic indicators: Speculators may be influenced by economic indicators such as inflation rates, interest rates, and GDP growth. Central bank actions: Central banks’ actions, such as interest rate decisions and quantitative easing, can impact speculators’ decisions.
The Impact of Trump’s Election on GLD and IAU
The 2016 US presidential election had a significant impact on the gold and silver markets, particularly on the prices of GLD (Gold ETF) and IAU (Silver ETF). The election’s outcome, which saw Donald Trump win the presidency, led to a surge in gold prices and a decline in silver prices.
Key Factors Contributing to the Price Movement
Several factors contributed to the price movement of GLD and IAU in the aftermath of Trump’s election. Some of the key factors include:
Increased uncertainty and volatility: The election’s outcome created uncertainty and volatility in the markets, leading to a surge in gold prices as investors sought safe-haven assets. Divergent market expectations: The election’s outcome diverged from market expectations, leading to a decline in silver prices as investors adjusted their expectations.
Gold prices experience a sharp rebound after FOMC meeting, driven by expectation of slower rate cuts.
The gold market has been on a rollercoaster ride of emotions since the FOMC meeting last week, with a massive price swing in just two days. The FOMC meeting ended with the Fed raising interest rates by 25 basis points, which led to a sudden and sharp decline in gold prices. However, the gold market has been experiencing a significant rebound since then, with prices rising by over 5% in just a few days. This rebound is largely driven by the expectation of slower rate cuts by the Fed in the coming months, which has led to a decrease in the attractiveness of interest rates for investors. As a result, investors are shifting their attention to other asset classes, such as gold, which is seen as a safe-haven asset in times of economic uncertainty. In contrast to the huge draw by gold prices after his first win, the current draw is much more muted. The current draw is around 3.6t, which is a significant decrease from the 5.6t seen after his first win. This suggests that the psychological environment for gold is different this time around. The current draw is not driven by fear of a looming interest rate hike cycle, but rather by the expectation of slower rate cuts.
The Case for Gold: Why Trump’s Return is a Positive for the Metal
Gold has long been seen as a safe-haven asset, a store of value that protects against inflation, currency devaluation, and economic uncertainty. Its value has historically been inversely correlated with the performance of the US stock market, making it a popular hedge against market volatility. However, the current market environment and the return of Donald Trump as President of the United States present a unique set of circumstances that could be bullish for gold.
Economic Uncertainty and Inflation
The 2024 election has led to a sharp pullback in gold prices, which was largely due to the uncertainty surrounding the outcome. However, with Trump’s return to the White House, the market is now expecting a more predictable economic environment.
The Gold Rush is Back On
The recent gold selling has already proved short-lived, and offers a great opportunity to load up on bargain gold stocks. They got sucked into gold’s post-election selloff, yet have epic fundamentals as they achieve all-time-record profits.
Why Gold Stocks Are a Smart Investment
Gold stocks have been a staple of the investment world for decades, and for good reason. They offer a unique combination of potential for long-term growth, stability, and diversification. Here are just a few reasons why gold stocks are a smart investment:
Diversification: Gold stocks can help diversify a portfolio by adding a new asset class that is not correlated with traditional stocks or bonds. Inflation protection: Gold has historically been a safe-haven asset during times of inflation, and gold stocks can provide a similar hedge against rising prices. Long-term growth: Many gold stocks have a history of long-term growth, making them a great option for investors looking to build wealth over time.
The gold price plummeted from $1,300 to $1,000 in just a few months. But now, with the Fed raising interest rates to combat inflation, gold is rising again. The gold price has more than doubled since the Fed began raising interest rates in 2022.
The Rise of Gold: A Contrarian Indicator
Gold has long been considered a safe-haven asset, a store of value that investors turn to during times of economic uncertainty. But its recent behavior has been anything but predictable. In fact, gold’s performance has been so erratic that it’s become a contrarian indicator, a sign that the market is about to make a significant shift. Key characteristics of gold’s recent behavior: + Rapid price appreciation + Increased volatility + Strong demand from institutional investors + Rising gold prices despite rising interest rates
The Contrarian Indicator
Gold’s recent behavior has been so unusual that it’s raised eyebrows among investors and analysts. The gold price has more than doubled since the Fed began raising interest rates in 2022, defying expectations that higher interest rates would lead to a decline in gold prices. Instead, gold has become a sought-after asset, with institutional investors clamoring to get in on the action. Why gold is rising despite rising interest rates: + Inflation concerns: Higher interest rates may not be enough to combat inflation, which could lead to a decline in the value of the dollar and a rise in gold prices.
Gold prices surged in 2020 due to concerns about inflation and a potential Biden presidency.
The Election and Gold Prices
The 2020 US presidential election had a significant impact on the gold market. As the election drew near, gold prices began to rise, reaching a 7-year high in September 2020. This was largely due to concerns about the potential for a Biden presidency, which some investors believed would lead to increased inflation and a decrease in the value of the US dollar.
Market Reaction to the Election
After the election, gold prices initially fell, but not as sharply as expected. American stock investors quickly resumed buying gold ETF shares, which led to an increase in holdings of gold ETFs such as GLD and IAU. This rebound in gold prices was largely driven by the expectation that a Biden presidency would lead to increased government spending and a potential increase in inflation. Key factors contributing to the rebound: + Increased government spending under a Biden presidency + Potential increase in inflation + Expectation of a decrease in the value of the US dollar
The Role of ETFs in Gold Investing
Gold ETFs, such as GLD and IAU, play a significant role in the gold market. These ETFs allow investors to buy and sell gold without physically holding the metal.
Would you like to discuss [insert topic(s)]? I’m more than happy to provide guidance, insights, and advice. Whether you’re seeking to improve your productivity, navigate the complexities of [industry/field], or simply looking for someone to bounce ideas off, I’m here to help. Adam, I know you’ve been considering [specific project/initiative] and are wondering if it’s the right fit for you.
The 200dma is a key indicator of the market’s sentiment. When gold is trading above its 200dma, it indicates that the market is optimistic about gold’s future prospects. However, when gold is trading below its 200dma, it indicates that the market is bearish on gold.
The 200dma: A Key Indicator of Market Sentiment
The 200-day moving average (200dma) is a widely used technical indicator in the financial markets. It is calculated by taking the average of the closing prices of the asset over a 200-day period.
Global economic trends and inflation concerns are driving the gold selloff.
The gold price has been under pressure for several months, and the recent price drop has been particularly sharp.
The Gold Selloff: A Global Phenomenon
The gold price has been declining steadily since the summer of 2022, with some analysts predicting a significant selloff. The reasons behind this decline are multifaceted and complex, involving a combination of factors such as inflation, interest rates, and global economic trends.
Key Drivers of the Gold Selloff
The Impact of Trump’s Election on GLD and IAU
The 2016 US presidential election had a significant impact on the gold and silver markets, particularly on the prices of GLD (Gold ETF) and IAU (Silver ETF). The election’s outcome, which saw Donald Trump win the presidency, led to a surge in gold prices and a decline in silver prices.
Key Factors Contributing to the Price Movement
Several factors contributed to the price movement of GLD and IAU in the aftermath of Trump’s election. Some of the key factors include:
Gold prices experience a sharp rebound after FOMC meeting, driven by expectation of slower rate cuts.
The gold market has been on a rollercoaster ride of emotions since the FOMC meeting last week, with a massive price swing in just two days. The FOMC meeting ended with the Fed raising interest rates by 25 basis points, which led to a sudden and sharp decline in gold prices. However, the gold market has been experiencing a significant rebound since then, with prices rising by over 5% in just a few days. This rebound is largely driven by the expectation of slower rate cuts by the Fed in the coming months, which has led to a decrease in the attractiveness of interest rates for investors. As a result, investors are shifting their attention to other asset classes, such as gold, which is seen as a safe-haven asset in times of economic uncertainty. In contrast to the huge draw by gold prices after his first win, the current draw is much more muted. The current draw is around 3.6t, which is a significant decrease from the 5.6t seen after his first win. This suggests that the psychological environment for gold is different this time around. The current draw is not driven by fear of a looming interest rate hike cycle, but rather by the expectation of slower rate cuts.
The Case for Gold: Why Trump’s Return is a Positive for the Metal
Gold has long been seen as a safe-haven asset, a store of value that protects against inflation, currency devaluation, and economic uncertainty. Its value has historically been inversely correlated with the performance of the US stock market, making it a popular hedge against market volatility. However, the current market environment and the return of Donald Trump as President of the United States present a unique set of circumstances that could be bullish for gold.
Economic Uncertainty and Inflation
The 2024 election has led to a sharp pullback in gold prices, which was largely due to the uncertainty surrounding the outcome. However, with Trump’s return to the White House, the market is now expecting a more predictable economic environment.
The Gold Rush is Back On
The recent gold selling has already proved short-lived, and offers a great opportunity to load up on bargain gold stocks. They got sucked into gold’s post-election selloff, yet have epic fundamentals as they achieve all-time-record profits.
Why Gold Stocks Are a Smart Investment
Gold stocks have been a staple of the investment world for decades, and for good reason. They offer a unique combination of potential for long-term growth, stability, and diversification. Here are just a few reasons why gold stocks are a smart investment:
The gold price plummeted from $1,300 to $1,000 in just a few months. But now, with the Fed raising interest rates to combat inflation, gold is rising again. The gold price has more than doubled since the Fed began raising interest rates in 2022.
The Rise of Gold: A Contrarian Indicator
Gold has long been considered a safe-haven asset, a store of value that investors turn to during times of economic uncertainty. But its recent behavior has been anything but predictable. In fact, gold’s performance has been so erratic that it’s become a contrarian indicator, a sign that the market is about to make a significant shift. Key characteristics of gold’s recent behavior: + Rapid price appreciation + Increased volatility + Strong demand from institutional investors + Rising gold prices despite rising interest rates
The Contrarian Indicator
Gold’s recent behavior has been so unusual that it’s raised eyebrows among investors and analysts. The gold price has more than doubled since the Fed began raising interest rates in 2022, defying expectations that higher interest rates would lead to a decline in gold prices. Instead, gold has become a sought-after asset, with institutional investors clamoring to get in on the action. Why gold is rising despite rising interest rates: + Inflation concerns: Higher interest rates may not be enough to combat inflation, which could lead to a decline in the value of the dollar and a rise in gold prices.
Gold prices surged in 2020 due to concerns about inflation and a potential Biden presidency.
The Election and Gold Prices
The 2020 US presidential election had a significant impact on the gold market. As the election drew near, gold prices began to rise, reaching a 7-year high in September 2020. This was largely due to concerns about the potential for a Biden presidency, which some investors believed would lead to increased inflation and a decrease in the value of the US dollar.
Market Reaction to the Election
After the election, gold prices initially fell, but not as sharply as expected. American stock investors quickly resumed buying gold ETF shares, which led to an increase in holdings of gold ETFs such as GLD and IAU. This rebound in gold prices was largely driven by the expectation that a Biden presidency would lead to increased government spending and a potential increase in inflation. Key factors contributing to the rebound: + Increased government spending under a Biden presidency + Potential increase in inflation + Expectation of a decrease in the value of the US dollar
The Role of ETFs in Gold Investing
Gold ETFs, such as GLD and IAU, play a significant role in the gold market. These ETFs allow investors to buy and sell gold without physically holding the metal.
Would you like to discuss [insert topic(s)]? I’m more than happy to provide guidance, insights, and advice. Whether you’re seeking to improve your productivity, navigate the complexities of [industry/field], or simply looking for someone to bounce ideas off, I’m here to help. Adam, I know you’ve been considering [specific project/initiative] and are wondering if it’s the right fit for you.
