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How Trump’s Victory Is Affecting Precious Metals

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Dec. 6 2016, Published 1:38 p.m. ET

Trump victory and gold

Donald Trump’s surprise victory set the equity markets in the US spinning. Dow futures plummeted by hundreds of points when it began to look as though Donald Trump would win. However, the markets were spooked only briefly by the unexpected outcome. The stock market reversed its losses in the matter of a few hours. The fall in the equity markets and the added fear about a Trump victory sent gold prices up. Gold touched a level of $1,300 an ounce. But later, gold began its retreat and fell to as low as ~$1,160 per ounce.

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Dollar affected gold

The loss in gold also resulted from the increasing strength of the US dollar. As seen in the above chart, gold maintained a clear downward trend. Gold and silver based funds like the Sprott Gold Miners (SGDM) and the Global X Silver Miners Fund (SIL) have also seen declining prices over the past one month. These two funds have plummeted 13.2% and 12.7%, respectively, over the past one month.

Mining stocks that also witnessed a similar fall include Alamos Gold (AGI), Kinross Gold (KGC), New Gold (NGD), and B2Gold (BTG). Combined, these four mining companies make up about 9.9% of the VanEck Vectors Gold Miners Fund (GDX).

Trump’s proposal for increased spending helped to revive the US dollar, and the dollar has kept rising. The booming dollar has sent precious metal prices down.

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