Has Gold Lost Its Luster? -- WSJ

By Ryan Dezember

Gold prices rose to records leading up to the presidential election, but they've slumped ever since, ending today's trading with the biggest weekly price decline since the Covid lockdown in March 2020.

Gold futures fell for the seventh time in eight trading sessions since the election and are now 8% off the all-time high of $2,788.50 a troy ounce hit on Oct. 30. Shares of the huge SPDR Gold Shares exchange traded fund-a popular way for individual investors to trade gold-are down 8% from their peak and on track for a six-day losing streak.

The swoon has wiped out about two months of gains that built up as investors fretted over the outcome of the presidential election and parked money in the safe-haven asset.

Gold prices often decline in the immediate aftermath of presidential elections, moving in the opposite direction of stocks, Citi analysts said in a recent report. The higher stocks rise in these periods, the more gold tends to fall, as investors sweep money back into riskier investments.

Citi's analysts say they expect the gold rally to eventually resume and reach $3,000 a troy ounce within the next six months. They recommended clients buy dips below $2,700.

That's a commonly held view on Wall Street, where analysts have come up with a lot of reasons to be bullish.

Declining interest rates make gold more attractive relative to bonds. Central banks are likely to keep hoarding the precious metal. The prospect of Trump's tariff policy boosting inflation could create demand for a hedge against rising prices.

And, as the Citi analysts note, when gold prices rise more than 20% in a year-they're up 24% so far in 2024-annual gains the following year average 15%.

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(END) Dow Jones Newswires

November 15, 2024 15:18 ET (20:18 GMT)

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