Gold braces for worst month in over a year on Trump-driven sell-off

Gold prices gained on Friday, boosted by a drop in the dollar and persistent geopolitical tensions, but bullion was still set for its worst monthly loss since September last year after a post-election sell-off driven by Donald Trump’s win.

Spot gold climbed 0.5% to USD 2,652.71 per ounce, as of 01:40 p.m. ET (1840 GMT), but was set for a weekly fall of over 2% after a sharp decline earlier this week. US gold futures settled 0.6% higher at USD 2,681.

Gold has dropped 3% so far this month, its worst monthly slide since September 2023, as “Trump euphoria” lifted the dollar earlier this month and stalled gold’s rally, triggering a post-election sell-off.

The dollar index fell to its lowest in over two weeks, but remains on track for a 2% rise in November as Trump’s Nov. 5 win fuelled expectations of big fiscal spending, higher tariffs, and tighter borders.

Gold, buoyed by geopolitical tensions and Federal Reserve interest rate cuts this year, now faces pressure as higher tariffs could stoke inflation and lead the Fed to adopt a cautious approach to further rate cuts.

It’s uncertain as of now, how Trump’s pledged tariffs will play out, said Jim Wyckoff, a senior market analyst at Kitco Metals.

However, “the uncertainty of the matter, the tariffs that could prompt a slowdown in economic growth could actually be beneficial for the gold market from a safe-haven basis.”

Bullion is traditionally seen as a safe investment during economic, geopolitical uncertainties and tends to thrive in a lower interest rate environment.

“Persistent global uncertainties continue to drive demand for gold as a safe-haven asset,” Ole Hansen, head of commodity strategy at Saxo Bank, said in a note.

On Thursday, Israel’s military reported suspects in southern Lebanon, calling it a ceasefire breach with Hezbollah, while Russia launched its second major attack on Ukraine’s energy infrastructure this month.

Spot silver added 0.9% to USD 30.54 per ounce, platinum gained 1.7% to USD 946.83 and palladium rose 0.7% to USD 981.63, although they were all set for monthly losses.

(Reporting by Sherin Elizabeth Varghese in Bengaluru; Editing by Mohammed Safi Shamsi)