Gold price hammered down to multi-week low as Trump victory triggers sharp USD rally
- Gold price plummets to a multi-week low as the USD surges to a four-month high.
- The Trump trade is back in play following the initial US election exit poll results.
- Surging US bond yields and the risk-on mood further undermine the XAU/USD.
Gold price (XAU/USD) comes under intense selling pressure heading into the European session on Wednesday and dives to the $2,700 neighborhood, or a nearly three-week low in the last hour. Republican nominee Donald Trump is leading the US presidential race and is most likely to become the 47th president, triggering a sharp US Dollar (USD) rally and prompting aggressive selling around the commodity.
Furthermore, deficit-spending concerns and bets for a less aggressive easing by the Federal Reserve (Fed) continue to push the US Treasury bond yields higher, which further contributes to driving flows away from the non-yielding Gold price. Adding to this, the risk-on impulse – as depicted by a strong rally in the US equity futures – suggests that the path of least resistance for the safe-haven XAU/USD is to the downside.
Daily Digest Market Movers: Gold price slumps as USD buying remains unabated
- The US Dollar surged to over a four-month top in reaction to the US election exit polls, which suggest that the vote is moving in favor of former President Donald Trump.
- The current electoral vote tally is 227 for Trump and 189 for Harris, with the former US President taking hold of the other swing states - Arizona, Georgia, Michigan, Pennsylvania and Wisconsin.
- Fox News called Republicans in control of the US Senate. Republicans won a key Senate seat in Ohio, with Trump-endorsed nominee Bernie Moreno projected to defeat Democratic Sen.
- With Trump outperforming, speculation about the launch of potentially inflation-generating tariffs and deficit-spending concerns push the US Treasury bond yields sharply higher.
- The yield on the benchmark 10-year US government bond surges around 15 points, or a nearly 3.5% intraday and climbs to 4.44%, hitting its highest level since July 2.
- The US election results clear out a major point of uncertainty for markets, triggering a fresh wave of risk-on trade and further contributing to capping the safe-haven Gold price.
- Meanwhile, the downfall in the safe-haven XAU/USD seem rather unaffected by concerns over Iran's plans for a retaliatory strike against Israel’s attack on its territory on October 26.
Technical Outlook: Gold price could find support near $2,690, or lower end of ascending channel
From a technical perspective, the $2,725-2,720 area might continue to act as immediate strong support, below which the Gold price could accelerate the slide towards testing sub-$2,700 levels. The latter represents the lower boundary of a short-term ascending trend channel extending from late July. A convincing break below should pave the way for an extension of the recent corrective pullback from the all-time peak touched last week and drag the XAU/USD toward the next relevant support near the $2,675 zone en route to the $2,657-2,655 region.
On the flip side, the $2,748-2,750 area now seems to have emerged as an immediate hurdle. The subsequent move up could lift the Gold price to the ascending trend-channel hurdle, currently pegged near the $2,780-2,785 region. This is closely followed by the $2,800 mark, which is likely to act as a key pivotal point. A sustained strength beyond will set the stage for the resumption of the prior well-established uptrend.
US Dollar PRICE Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Euro.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 1.76% | 1.20% | 1.65% | 0.57% | 1.41% | 1.17% | 1.12% | |
| EUR | -1.76% | -0.54% | -0.08% | -1.16% | -0.35% | -0.59% | -0.63% | |
| GBP | -1.20% | 0.54% | 0.44% | -0.62% | 0.20% | -0.05% | -0.09% | |
| JPY | -1.65% | 0.08% | -0.44% | -1.05% | -0.23% | -0.49% | -0.52% | |
| CAD | -0.57% | 1.16% | 0.62% | 1.05% | 0.83% | 0.58% | 0.53% | |
| AUD | -1.41% | 0.35% | -0.20% | 0.23% | -0.83% | -0.25% | -0.30% | |
| NZD | -1.17% | 0.59% | 0.05% | 0.49% | -0.58% | 0.25% | -0.04% | |
| CHF | -1.12% | 0.63% | 0.09% | 0.52% | -0.53% | 0.30% | 0.04% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
Author
Haresh Menghani
FXStreet
Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.
