Why do experts warn of a sharp drop in gold prices after the US presidential election?

(NLDO) – Gold prices often decline after the US presidential election and the drop can reach up to 200 USD/ounce... a series of shocking increases over the past months.

This is the opinion of gold expert Tran Duy Phuong when talking to a reporter from Nguoi Lao Dong Newspaper about the price of gold after the US presidential election.

By the afternoon of November 7, the price of SJC gold bars and 99.99 gold rings continued to plummet by millions of VND/tael due to the impact of the vertical fall of world gold prices. Currently, the world gold price is trading at 2,658 USD/ounce, down about 130 USD/ounce compared to the historical peak.

The price of SJC gold bars listed by businesses is 83 million VND/tael for buying and 87 million VND/tael for selling. Meanwhile, the price of 99.99 gold rings is only 82.5 million VND/tael for buying and 84.5 million VND/tael for selling. Compared to yesterday, the price of gold has dropped the most by 4-5 million VND/tael.

- Reporter: After the US presidential election, especially with Donald Trump's victory, how will the price of gold fluctuate, sir?

+ Mr. Tran Duy Phuong: Statistics in the last 5 US presidential elections show that whoever wins the presidency, the price of gold will decrease afterwards. And in fact, from yesterday afternoon, November 6 until now, the price of gold has decreased sharply by nearly 100 USD/ounce.

Gold expert Tran Duy Phuong

This downward trend is not short-lived but can last for a whole month, along with narrow-range recoveries.

For example, in the 2020 US election, the price of gold dropped about 200 USD after Mr. Biden won; before that in 2016 when Mr. Donald Trump was elected, the price of gold also dropped 200-250 USD/ounce for many months.

Combined with the fact that gold prices have increased quite strongly in recent times, the probability of a decrease in gold prices due to profit-taking pressure in November and December is difficult to avoid.

However, this decline may not be as strong as the previous period because the current situation has changed compared to 4 years ago. After the adjustment, the possibility of gold prices increasing again, even surpassing the old peak.

- What factors make you think that gold prices will still shine in the medium and long term?

+ Although the transition to a new President in the US will not take place until early January 2025, Mr. Trump's policy is to favor low interest rates. He once wanted the US Federal Reserve (FED) to cut interest rates as much as possible, because when interest rates decrease, gold prices will be supported. Since March and April of this year, he has been constantly talking about the need for the FED to cut interest rates.

People jostle to sell gold in Ho Chi Minh City on November 7. Photo: Le Tinh

Another factor is that Mr. Trump has talked about starting trade wars with many countries. If this happens, the world gold price will continue to increase as investors worry about instability. During his previous term, Mr. Trump also continuously had policies of trade tension with China, the world gold price also increased in that cycle.

However, even if the gold price increases in the medium and long term, it will be difficult to surpass the $3,000/ounce mark. Because the gold price has increased by about 40% since the beginning of the year, if it declines by about $100-200/ounce and then breaks out again, it will be very difficult to have a sudden change like last year. Although the gold price, as I said, will fluctuate depending on what Mr. Trump will do and how he will do it.

- So how will the price of SJC gold bars and gold rings fluctuate?

+ Domestic gold prices often fluctuate according to world gold prices, especially 99.99 gold ring prices fluctuate more closely.

Therefore, domestic gold prices will decrease following the world prices. Gold ring prices will increase and decrease following the world prices, while SJC gold bar prices will depend more on the management and stabilization of the gold market by the State Bank.

If buying gold, investors need to allocate a reasonable proportion, not putting too much into gold. In particular, if buying for the medium and long term, they should watch for sharp declines, but if buying for short-term trading, it is very difficult, because the buying and selling price range is kept very high by businesses.

Source: https://nld.com.vn/vi-sao-chuyen-giang-canh-bao-gia-vang-giam-manh-sau-bau-cu-tong-thong-my-196241107145119014.htm