In the aftermath of the US election surprise, gold prices have been in a significant retreat as the US dollar has surged, global equity markets have stabilized and strengthened, and interest rates are increasingly expected to rise.

The US dollar was boosted shortly after Donald Trump’s presidential victory earlier this week due to expectations of fiscal stimulus and higher inflation under a Trump Administration. In turn, this has helped lead to greater expectations of rising interest rates. With the price of gold generally correlated inversely with both the US dollar and rising interest rates, the precious metal has dropped markedly after its initial Trump-fear-driven spike early Wednesday morning.

Exacerbating the current drop, the surprise lack of volatility in equity markets after Trump’s win has sharply decreased the appeal of gold as a safe-haven asset. During the election vote-count on Tuesday night into Wednesday morning, gold rapidly rose around 5% due to fears that Trump could actually win. After he did win and risk perceptions subsequently dissipated on Wednesday, gold soon reversed its gains. On Thursday, this reversal extended as price fell further.

Currently having dropped to approach a major support level around the $1250 level, which has served as key support throughout October, gold has once again arrived at a critical technical juncture. With further strength in equity markets and the dollar, along with continued expectations of higher interest rates, gold could have substantially further to retreat. With any major breakdown below $1250 support, the next major downside target is around the $1200 psychological support level.

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