Gold prices fell nearly 5% since election day last week, before recovering by around 1% over the past couple of days. In the stock market, gold futures are the highest they have been in almost a month as the U.S. dollar dropped.
Since Gold is considered a safe-haven asset for an investor, investments on gold are made when the future of the economy is uncertain. And since gold is an investment that offers capital gains, an increase in interest rates tends to lower the demand for it and shifts investors to different things.
During the third quarter, the price of gold rose sharply because of global activities and raising questions regarding the world economy, such as the unexpected Brexit vote over the summer. London PM Fix gold prices averaged roughly $1,335 per ounce in the third quarter, around 23% higher since the start of the year.
Experts are expecting a spike in interest rates by December because of our job market improving. While the unemployment is still at 4.9%, a recent press release from the Federal Reserve Open Market Committee heightens the expectations for higher interest rates.
Adding to the impact of rising rate hike expectations, the election further dampened the price of gold. President-elect Donald Trump favors several pro-business policies that could send investors in another direction. Many of the promises he made during campaigning have been well received by markets.
An expected spike in interest rates in December and a potential boost in the economy with a change at the White House is likely to limit the possibility for gold prices in the months to come.
Below are the latest charts from Bloomberg on gold and silver along with some information on other metals.
- Palladium for rose as much as 2.6 percent to $762 an ounce on the New York Mercantile Exchange, the highest since June 2015. The metal has surged 23 percent this month, heading for the biggest gain since February 2008.
- Platinum also advanced on the NYMEX, while silver climbed on the Commodity Exchange or COMEX.