SPDR Gold ETF loses over $1 billion as prices hit 7-week low
Gold prices plummet to 7-week low at $2,660 amid surge in risk assets and dollar strength
SPDR Gold Shares (GLD), the largest gold ETF globally, has shed over $1 billion in a sharp weekly outflow. This is the most significant outflow in more than two years, a reaction tied to broader market trends following political developments. The gold market is now seeing this turbulent phase as investor interest in gold ETFs recently dropped, hinting at a shift in sentiment.
Gold prices have also slipped noticeably to a 7-week low as well as its December futures, which is currently trading at $2,660.30, declined down by $34.50. This drop mirrors a broader sell-off as confidence in risk assets like stocks and bitcoin surged including the dollar index which has also strengthened to a five-month high. This combination of factors has pushed gold under pressure, triggering technical selling and prompting short-term traders to lock in profits.
Historically, the election of Republican administrations tends to weigh on gold prices in the months following a victory. Analysts noted that gold typically faces an average 4.5% decline within 60 days after a Republican win, in contrast to a 3.8% increase following a Democratic victory. This historical trend aligns with recent market behavior, as many anticipate a shift toward conservative economic policies, which could temper gold’s appeal as a safe haven.
Inflation and fiscal policies to drive Gold rebound
Due to the recent declines, analysts suggest that gold’s downturn won’t persist indefinitely. Factors like the U.S. debt outlook and the potential for rising inflation are likely to support prices in the longer term. Another bullish factor for gold is the new administration’s proposed tax cuts and spending initiatives that could further widen the federal deficit, putting upward pressure on inflation. Should inflation expectations rise, the Federal Reserve may reconsider its current dovish path, which could fuel gold rally. For the time being, analysts suggest support may hold near the $2,600 per ounce level.
Russia and India continue to make strategic moves to bolster their Gold reserves. This decision aligns with a larger trend of major economies doubling down on gold as a stable asset
