Gold prices dipped after the US dollar surged in value following a Trump victory on Wednesday. The US dollar and gold prices are similar to a see-saw in the economy as one rises when the other falls. Now that the US dollar hit 104.94 in the DXY index, gold prices dipped nearly 40 points and shed close to 1.4% in value.
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Commodity investors are taking massive entry positions in the US dollar today and ignoring gold. The precious metal is seen as a haven and attracts bullish sentiments when the overall market is negative. Institutional investors mostly park their funds in gold during financial turmoil as it acts as a hedge against inflation.
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However, on the flip side, traders pull out from gold and invest in assets, delivering profits when the broader market recovers. This is similar to today’s situation, as gold is losing out against the stronger US dollar in the charts. The XAU/USD gold chart has risen nearly 32% year-to-date, delivering stellar profits to investors.
Things might go south here, as gold could have peaked and be heading for a correction in prices. The precious metal was the most sought-after asset in the commodity market this year, and things could be different soon.
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Gold Prices Under Pressure
Investors could make merry of the cryptocurrency and stock market rally, leaving aside the precious metal. In addition, the Federal Reserve will also meet this week to discuss interest rate cuts. Market volatility could take a toll on gold, further slumping the indices. The risk is high as money from the precious metal faces an exodus.
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It is advised to remain cautious on gold and avoid taking an entry position this month. It is best to wait and watch how things play out in the coming weeks before going long on the glittery metal. Until then, the stock and the cryptocurrency market could deliver the desired results.
