Despite the long-term uncertainty that remains, especially with Trump known for sometimes unpredictable stances, much of the interest in gold as a safe haven has declined after the most bullish scenario for gold—a disputed election—did not materialize. The dollar's rally following Trump's reelection also negatively impacts gold, the price of which is expressed in U.S. currency. According to Kristina Hooper, chief global market strategist at Invesco Advisers, this could lead to a capital outflow from gold towards cryptocurrencies, particularly among speculative investors.
However, despite these factors, gold could still have room to grow in the long term, although it has experienced a 7 percent drop since election day. Rob Haworth, senior investment strategist at US Bank, points out that interest in gold typically increases when other assets do not perform well. Matt Miskin, co-director of investment strategy at John Hancock Investment Management, mentions that given the strong outlook of the current U.S. economy, gold could be considered a contrarian option.
Donald Trump's victory triggered a quick momentum in markets, from stocks to bitcoin, while gold will take longer to adjust. According to Deutsche Bank, in the days following the election, gold's performance was the worst in at least 13 presidential elections in the U.S. Trump's promises regarding fiscal and tariff issues could result in larger deficits and inflation, which could lead to an increase in gold purchases as a hedge against inflation. Additionally, if his second term affects global trade and geopolitics, central banks like those in China and Russia could increase their gold purchases to diversify their reserves.
The current decline in gold prices represents a significant shift for an asset that had experienced a 30 percent increase in the year prior to the U.S. elections. Despite this, some investors believe that the current environment, although unfavorable for gold, offers opportunities in other areas, such as financial assets and sectors that could benefit from Trump's policies. Jay Hatfield, CEO of Infrastructure Capital Advisors, emphasizes that there are more attractive places to invest than gold, especially with the prospect of implementation of the policies announced by Trump during his electoral campaign.
In summary, uncertainty surrounding gold persists despite its reduced appeal as a safe haven following the U.S. presidential elections. While some investors consider there are more attractive alternatives, such as cryptocurrencies, gold still retains long-term growth potential, depending on factors like Trump's foreign policy, the global economy, and geopolitics.
