Gold prices rose nearly $50 per ounce yesterday, while U.S. stocks set record highs for the second consecutive session following the U.S. presidential election.
At the close of trading on November 7, spot gold prices increased by $47, reaching $2,706 per ounce. This trend reversed the more than $80 decline seen just a day earlier.
The main reason for gold’s increase was the decline in the U.S. dollar. The Dollar Index fell 0.7% to 104.3 points, as investors took profits. The Federal Reserve’s decision on November 7 to cut the benchmark interest rate by 25 basis points (0.25%) made the precious metal even more appealing.
World gold prices yesterday reversed and increased sharply
"Gold’s trend remains upward. No event this week, from the U.S. presidential election to the Fed’s policy decision, is likely to change that trend, unless the Fed signals an end to rate cuts," said Tai Wong, an independent precious metals investor. The market currently expects the Fed to cut interest rates by another 25 basis points (0.25%) in its December meeting.
On the U.S. stock market, the S&P 500 hit a new high yesterday at 5,973 points, up 0.74%. The Nasdaq Composite rose 1.5% to 19,269 points, closing above 19,000 points for the first time. The DJIA was nearly unchanged.
During the session, all three indices hit new record highs. U.S. stocks have now risen for two consecutive sessions following the presidential election, with Donald Trump emerging as the victor.
Major technology stocks led the market. Apple and Nvidia both rose over 2%, while Meta Platforms gained 3.4%. On the other hand, financial stocks declined, with JPMorgan Chase falling 4.3% and American Express down 2.8%.
Federal Reserve Chair Jerome Powell stated yesterday that the Fed feels "comfortable" with the current state of the economy, indicating that any future rate changes are likely to be minor adjustments.
"The market shouldn’t expect major rate cuts unless the economy takes a downturn, which currently seems unlikely," said Jamie Cox, an analyst at Harris Financial Group.
Wall Street expects Trump’s victory to benefit risk assets, such as stocks, partly due to his proposed corporate tax cuts. However, concerns about continued government budget deficits and rising import tariffs have stoked inflation fears.
Tony Roth, Chief Investment Officer at Wilmington Trust, noted that until Trump’s plans are clearly laid out, the market could continue to be volatile, with stocks likely trending upward.