investors piled into gold when polls showed donald trump <u+2019>s chances for victory were improving. now that he has won the presidential election, they are selling. the turnabout reflects how rapidly markets are reassessing what mr. trump<u+2019>s presidency could mean for u.s. economic growth, inflation and interest rates. investor optimism that mr. trump<u+2019>s policies could boost the economy dragged down gold prices 8.5% from their six-week high reached on election day. gold prices on friday suffered their biggest one-day loss in nearly three years, closing down 3.3% at $1,224.30 a troy ounce. investors have <u+201c>faith in the dollar and the american economy as a whole,<u+201d> said timothy major, a stockbroker at paulson investment co., which focuses on precious metals. <u+201c>i<u+2019>m not seeing any real strong cases for gold now.<u+201d> during most of the campaign, mr. trump<u+2019>s antitrade stance and limited policy details sent worried investors fleeing to gold as a haven. some gold bugs also felt common cause with mr. trump, who has praised bullion as an investment and features the precious metal throughout many of his gilded hotels and skyscrapers. <u+201c>ahead of the election we forecast gold could rise to $1,500 an ounce were trump to win,<u+201d> analysts at hsbc said in a note a day after the election. <u+201c>we expect much of this move to happen swiftly.<u+201d> but his first moves as president-elect<u+2014>including a conciliatory victory speech that included plans for infrastructure spending<u+2014>left investors with renewed hope for a stable transition and allowed them to focus on mr. trump<u+2019>s plans for economic growth. u.s. bond yields have surged on hopes that this boost to fiscal spending succeeds. rising bond yields make gold a less-attractive prospect for investors, as the metal pays nothing to its holders. some gold bulls are worried that a more robust economy could allow the federal reserve to raise rates at a faster pace next year after likely raising rates in december. gold prices are still up 15% this year, fueled by expectations that the federal reserve would raise rates very gradually in coming years. before that, gold had three straight losing years. many investors say a bullish case for the metal still exists, even in a world of rising interest rates. there is still a lack of clarity on the policies of a trump administration, or how they will be funded. and many economists say his protectionist trade policy could undermine u.s. growth. the tax cuts and fiscal spending mr. trump has proposed could send inflation higher. some investors buy gold when consumer prices rise, expecting the metal to hold its value better than other assets. others point to geopolitical risks that could spark renewed demand for gold<u+2019>s haven properties, such as italy<u+2019>s dec. 4 referendum on a constitutional overhaul that could shake up its government and open the door for an exit from the european union. <u+201c>it<u+2019>s all sort of quiet at the moment. no one is really going to know what he<u+2019>s going to do,<u+201d> said christopher ecclestone, mining strategist at research firm hallgarten & co. <u+201c>it really comes down to surprises.<u+201d> write to ira iosebashvili at ira.iosebashvili@wsj.com and stephanie yang at stephanie.yang@wsj.com
investors ditch gold after trump<u+2019>s win - wsj
stephanie yang