Top Stories This Week: Gold Price Drops, Then Bounces on Trump Victory, Fed Rate Cut

The gold price faced both ups and downs this week as two key events impacted the industry.

The period began on a strong note for the yellow metal, which was steady at around the US$2,740 per ounce level on Monday (November 4) and Tuesday (November 5). However, Donald Trump's victory against Kamala Harris at the polls had a negative effect on gold — it sank to just under US$2,650 on Wednesday (November 6).

What factors drove that decline in gold? John Feneck of Feneck Consulting said in an interview that the drop was a knee-jerk reaction to the election outcome. Here's how he explained it:

"What happened was you had a risk-on moment ... it wasn't that gold and silver were no longer relevant, it was simply that people were celebrating the Trump victory.

Trump's a Republican, most Wall Street participants and Bay Street participants vote Republican, so they were voting with their dollars and basically moving stocks up.

The US dollar rallied sharply (on Wednesday), up about 1.5, 1.6 percent, and when you have a huge move up in the dollar, typically you'll have a move down in gold and silver. It's just a counter-relationship for many years if you go back and look at charts."

Gold was already recovering by Thursday (November 7), rising back above US$2,700 in the lead up to the US Federal Reserve's interest rate decision. It finished the week lower, changing hands at the US$2,684 level.

As was widely expected, the central bank cut rates by 25 basis points, a tamer move than its 50 basis point reduction in September. Speaking at a press conference after the decision was announced, Chair Jerome Powell said that while the Fed is "feeling good" about economic activity, there's still work to do on inflation.

"So we’re not declaring victory, but we feel like the story is very consistent with inflation continuing to come down on a bumpy path over the next couple of years and settling around 2 percent. That story is intact" — Jerome Powell, US Federal Reserve

Even so, he didn't outline the Fed's path forward, instead saying that officials will continue to assess incoming data and other elements. He also emphasized that the outcome of the election won't impact decisions on monetary policy.

Powell gave an even stronger answer whether he will retain his position as Fed chair once Trump takes office. He told reporters that he won't resign if he is asked to, adding that it's "not permitted under the law" for Trump to fire him.

Although Trump appointed Powell as Fed chair in 2018, he has since been critical of Powell's actions.

Trump will be sworn in as president for his second term on January 20, 2025, and the Investing News Network (INN) team will be watching to see how gold and the broader markets react as that day approaches.

INN will also be closely monitoring how Trump's policies could affect the mining sector — already a top Rio Tinto (ASX:RIO,NYSE:RIO,LSE:RIO) executive has called for the president-elect to speed up permitting in the country.

"Permitting in the US is the second-longest in the world. The US needs to provide its own security of supply for this industrial base" — Bold Baatar, Rio Tinto

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Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.

Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.