Gold investors are also looking ahead to the upcoming US Federal Reserve policy meeting for clues on the pace of interest rate cuts, Reuters reported on November 6. The prospect of more rate cuts is supporting gold’s strong rally this year.
Spot gold fell 1.5% to $2,703.93 an ounce at 11:30 p.m. EDT (1100 GMT). It had hit a record high of $2,790.15 last Thursday.
US gold futures fell 1.3% to $2,713.60. The dollar hit a four-month high, making gold more expensive for buyers holding other currencies. Traders expect higher tariffs under Mr Trump to keep interest rates higher for an extended period.
Commenting on the direction of gold, Mr. Ole Hansen, Head of Commodity Strategy at Saxo Bank said: "Gold will be affected by the risk of rising inflation, which is likely to slow the pace of US interest rate cuts as new tariffs are applied, along with the continued demand for safe assets."
Gold is seen as a hedge against inflation, but persistently high interest rates will reduce its appeal. Because gold does not pay interest.
In recent years, gold has performed well under both Republican and Democratic administrations.
“Looking ahead, the big question for the gold market is how different today’s version of President Trump will be from the one who won the election eight years ago,” said Carsten Menke, an analyst at Julius Baer.
The Fed's two-day policy meeting concludes tomorrow (November 7). Markets generally expect the Fed to announce a 0.25 percentage point rate cut, following a 0.5 percentage point cut in September 2024.
Commodity prices from oil to metals and grains fell on Wednesday as the dollar strengthened. Spot silver fell 2.6% to $31.80 an ounce. Platinum fell 2% to $979.65 and the white metal fell 2.9% to $1,044.75. All three metals hit three-week lows.
