Today, the dust has settled on the US presidential election, with the Republican Donald Trump declaring victory.

Finance News reporters have noticed that since the beginning of November, the overall international gold price has been fluctuating. Around 2:30 pm today, spot gold broke through the $2710.00/oz mark, with an intraday drop of about 1.24%; COMEX gold futures' block orders latest report $2719.00/oz, with an intraday drop of approximately 1.12%. So, will the year-end gold bull market continue? How do institutions view the recent fluctuations in gold?

In November, the international gold price quickly fell after reaching a new high.

Since the beginning of this year, the spot gold price has increased by over 25% year-to-date. However, entering November, the fluctuations in the international gold price have significantly intensified.

On the evening of November 1st, spot gold broke through the $2760/oz mark, with a daily increase of 0.59%. However, since then, the spot gold price has failed to set new highs and instead oscillated downwards. On November 4th, spot gold opened lower, hovering around $2731/oz for adjustments. On the day the U.S. election votes ended, the international gold price continued to decline, currently maintaining at the $2710.00/oz mark. Compared to the data from November 1st, the price of spot gold has dropped by around $50 per ounce in the past 6 days.

Regarding the recent trend of gold, Dongzheng Futures' Xu Ying recently pointed out that the gold price has retraced from its peak and Trump's trading activities have slightly cooled down. In addition, the fundamental data providing bullish signals for gold are limited.

A macro analyst from a brokerage also told Finance News reporters that the recent fluctuations and declines in the international gold price were within expectations. Looking at historical data, every time before and after the U.S. presidential election, the volatility of gold prices would generally intensify. Specifically, against the backdrop of multiple historical highs in the international gold price this year, as the 'shoe drops' nears, many funds will choose to take profits. Additionally, after the conclusion of the U.S. election, a large amount of risk-averse funds in the market will reorient, and some funds will also opt to withdraw from the gold market. This is a key reason for today's gold price decline.

Institutions remain bullish on the future trend of gold.

How do institutions view the performance of the future gold market? From a recent perspective, the mainstream is still bullish on gold.

Today, Zhang Judong and others from the Research Department of China International Capital Corporation pointed out in their publication "China International Capital Highlights" that since the beginning of 2024 and mid-September, against the backdrop of strong economic demand in the USA and a substantial increase in US bond yields, gold has broken through key levels and repeatedly reached new highs. As a currency, gold's supply is relatively limited, not affected by national credit expansion, and therefore relatively resistant to inflation and national credit risk compared to the US dollar. This pricing logic gives gold two paradigmatic pricing logics at the macro level, namely inflation and fiscal.

Looking ahead, it reaffirms the core view that the USA has entered a major fiscal era with a consensus of both parties, and interest rates are expected to remain high for a long period. Therefore, the incremental demand for gold ETFs may be limited, but there is hope that the space for emerging market central banks to purchase gold will further open up from a low level. "We believe that inflation, fiscal policy, and central bank gold purchases are expected to jointly drive the continued bull market structure of gold."

The above-mentioned macro analysts also believe that with Trump's presidency becoming a certainty, the future trend of gold is becoming increasingly clear. According to Trump's core policy propositions such as "lowering interest rates, increasing income, and raising tariffs", the US is likely to experience a second round of inflation, which will be bullish for gold. In addition, considering that the Fed has entered a rate-cutting cycle and the high level of the US government debt burden is difficult to change in the short term, the attractiveness of the gold market will also be further enhanced. Therefore, short-term corrections do not change the upward trend.

AI may pose the greatest risk to long-term gold price strength.

Regarding the future trend of gold, it is worth noting that Zhang Jundong and others from the Research Department of China International Capital Corporation have provided a relatively special perspective today.

Zhang Jundong and others pointed out that possibly due to hedging considerations, the correlation between the price of gold and US AI stocks has significantly increased over the past year. In the absence of confirmation or refutation of the AI narrative in the US, it is expected that the high correlation may continue, "but we believe that the greatest risk to the long-term gold price may be AI". If the US successfully achieves re-industrialization through AI technology and significantly increases total factor productivity, this will alleviate inflation and fiscal deficit pressures, consolidate the credit of the dollar, and the gold bull market may come to an end, as in the information technology wave of the 1990s. And if the US AI revolution is refuted, gold may truly enter a "golden age".

In addition, Yu Zhi, a researcher at Yuyixintrust, told a Caixin reporter that overall, the price of gold is mainly related to whether the dollar is strong and geopolitical risks. Future trends need to be referenced with the above two indicators.

However, the above macro analyst pointed out that considering the reversal of the global trend towards globalization, the international trade's 'de-dollarization' has become a certainty. Even if the US dollar remains strong in the long run, the independent trend of gold in the future will still continue, and the logic of the negative correlation between the US dollar and gold may have been completely changed.

Editor/Rocky