Opportunity to buy at the bottom? Gold fell to a one-month low, but Wall Street still bullish for $3000.

This week, the market continued to speculate on the "Trump trade," the dollar continued to rise, and the international gold price fell to a one-month low. After falling 2.5% the previous trading day, gold prices fell 0.6% on Tuesday as the US dollar index rose to its highest level in a year, related to Trump's promises of tax cuts and trade tariffs. As of the time of writing, spot gold narrowed its decline to 0.5%, to around $2606 per ounce, down about 7% from the record high set last month. The Bloomberg Dollar Spot Index has risen for the third consecutive day. Prices of silver, palladium, platinum, and other precious metals also fell. The stronger dollar makes commodities priced in dollars more expensive for most buyers. Since the US election last week, gold has fallen by about 5%, as hedge funds unwind their bullish positions and with money flowing more towards the US stock market, exchange-traded funds (ETFs) have become less supportive of gold. The largest gold ETF globally experienced its largest single-week outflow of funds since 2022. In the aftermath of Trump's victory leading traders to take profits, the SPDR Gold Trust, the largest gold ETF globally, saw outflows of over $1 billion last week, the largest single-week outflow since July 2022. The total holdings of gold ETFs fell by 0.4%, marking the second consecutive weekly decline. Last month, investors flocked to safe-haven assets due to the high uncertainty surrounding the US election, but with Trump winning key battleground states and the Republicans controlling the Senate, investors exited positions to take profits. Trump's victory also boosted US stocks and the dollar, reducing the attractiveness of gold to investors holding other currencies. Chris Weston, Research Head of Pepperstone Group Ltd., said that following a break below the 50-day moving average, the sell-off this time was "partly technical." Gold price falls to one-month low as the dollar strengthens Supported by loose policies from the Fed, central bank purchases, and escalating geopolitical and economic risks driving safe-haven demand, gold prices have risen by more than 25% so far this year. Investors will be looking for clues on the Fed's loose path from the US core CPI report for October released this week (excluding food and energy). Last week, the Fed cut interest rates by 25 basis points. Many economists believe that the inflation impact of Trump's policies led to a smaller rate cut than previously expected. Lower borrowing costs often benefit gold, which does not yield interest. Adam Turnquist, Chief Technical Strategist at LPL Financial, stated, "Rising economic growth expectations and inflation push up bond yields and the dollar, making gold less attractive to investors without a yield return." Turnquist said, "A continued strengthening dollar could weigh on international stock markets, especially emerging markets and most commodities. Platinum, gold, and silver are the most negatively correlated commodities with the dollar." Investment banks remain bullish on the future trend of gold Despite short-term pressure on gold prices, many analysts expect gold prices to continue rising due to rising physical gold demand from major central banks, investor inflows into physical gold ETFs, and expectations for speculative positions to continue. Regarding the drop in gold prices, strategists at UBS, including Giovanni Staunovo, believe that the post-election drop in gold prices was "unexpected and overdone." They believe that gold could potentially be supported going forward as a hedge against inflationary pressures resulting from increased US government borrowing. Citigroup pointed out in a research report that historically, gold has tended to underperform after US presidential elections. For example, after Trump took office in 2016, gold fell by 8% in one month. However, Citigroup noted that this trend provides buy-low opportunities for investors, and still believes that gold prices could rise to $3000 per ounce within six months. Goldman Sachs also predicts that by the end of 2025, gold prices will reach $3000 per ounce. Goldman's Lina Thomas and Daan Struyven wrote, "History shows that when uncertainty and investors seek safe havens, gold holdings tend to rise." Undoubtedly, gold prices are under short-term pressure, but JPMorgan mentioned last week that the long-term drivers of gold prices remain intact and do not change the long-term positive outlook: gold continues to benefit from the Fed's rate cuts, central bank gold purchases, and global trading targeting currency devaluation, which have supported gold prices at different times over the past year, and regardless of the outcome of the US election, these drivers may continue to exist. JP Morgan's global commodity analysis team, led by Natasha Kaneva, wrote in a report, "No matter the outcome of the US election, the supporting factors are still present, and we see any post-election pullback as a buying opportunity." Huaxi also released a research report stating that in the medium to long term, despite the strengthening of the dollar due to the tariff policies and manufacturing reshoring measures that the Trump administration will adopt, its proactive fiscal and tax policies will increase the overall government fiscal deficit, leading to expected future inflation. Geopolitical conflicts continue to escalate globally, and uncertainties or the main trading opportunities for gold in the medium term. The long-term rise in gold prices remains the trend, and there are good opportunities for future gold allocation.