Gold plummets to three-week low below $2,700 as Trump’s victory boosts USD

Gold price tanks as US yields rise and underpin the Greenback.

Trump’s decisive win lifts US yields and US Dollar to four-month high, pressuring Gold.

Fed’s expected rate cut on Thursday, which could halt Bullion's losses.

Gold plunged to a three-week low below $2700 a troy ounce on Wednesday after the 2024 US Presidential election. The Republican candidate, former President Donald Trump, won the contest, bolstering the Greenback and US Treasury bond yields. Therefore, the XAU/USD posted losses of over 2.50% and traded at $2,667 at the time of writing.

Traders’ uncertainty has finally subsided, as Trump’s victory was not as close as expected. Besides this, the Republican party completed the red sweep, achieving the majority in the Senate and controlling the House of Representatives.

Therefore, the Trump trade extended as market participants lifted US equities to record highs, the Greenback soared to a four-month peak, and the US Treasury yield skyrocketed.

Investors continued to digest the US economic outlook. Trump’s economic policy suggests imposing tariffs, a wider fiscal deficit, and fewer taxes. His economic proposals are at odds with the Fed's fight against inflation. Therefore, the US central bank would be forced to adopt a gradual approach when easing monetary policy.

In the meantime, the US Dollar Index (DXY), which tracks the buck’s performance against six peers, is up at 105.04 and gains 1.54%. Yields, particularly the 10-year benchmark note coupon, surged 16 basis points to 4.437%.