The soaring gold price has recently experienced severe fluctuations, with spot gold once falling below the key level of $2590 per ounce, but today it has risen to $2615 per ounce. Experts believe that the recent drop in gold prices is mainly due to the strength of the US dollar, with the US Dollar Index closing at 106.024 today, near a six-month high. After Trump's victory, the stimulus to gold prices from geopolitical risks is expected to decrease, and the central bank's pause in gold purchases has interrupted the current upward trend in gold prices. It is expected that gold prices will remain weak and fluctuate this week.

Looking ahead, institutions believe that the target price for gold is $2900 per ounce, which means there is still an 11% upside potential. Analysts believe that in the medium to long term, the potential for a second round of inflation in the USA is rising, combined with ongoing geopolitical turmoil. Gold's inflation resistance and safe-haven nature will continue to support the gold price.

It is expected that the short-term gold price will continue to be weak and fluctuate.

In recent days, there has been a significant adjustment in the price of gold. After Trump won the US election last week, the uncertainties surrounding the election and risk aversion receded. Furthermore, the market's expectation that Trump's policy proposals would boost inflation led to a reduction in expectations for future interest rate cuts. As a result, the US dollar and US bond yields surged, putting significant pressure on gold prices, causing a significant retreat.

On November 8th, the main futures price of Shanghai gold fell by 2.26% to 615.48 yuan/gram compared to the 1st, while the main comex gold futures price fell by 1.97% to $2691.70 per ounce; the gold T+D spot price fell by 2.31% to 612.87 yuan/gram, and the spot price of gold in London fell by 1.89% to $2684.04 per ounce.

On November 12th, spot gold continued to experience a series of declines, falling below the key level of $2590 per ounce and suffering the most significant drop since September. Gold eventually closed down by 0.81%, at $2598.41 per ounce, reaching a new low in nearly two months. Today, spot gold rose by 0.34% to $2615 per ounce.

Zhao Qingming, Vice President of the Huiguan Information Research Institute, believes that the main reason for the drop in gold prices is the strength of the US dollar. There is a seesaw relationship between the US dollar and gold price - when one strengthens, the other weakens.

Today, the US dollar index once broke through 106 points, closing at 106.024, near a six-month high. Compared to the low point of 100.157 points on September 27, the index has risen 5.9% in a month and a half.

"In the past three years, the price of gold has continued to rise, with the spot gold price in London rising from $1800 per ounce in early 2022 to nearly $2800 per ounce recently, an increase of over 50%." Zhao Qingming believes that Trump's victory will interrupt the current upward trend in gold prices. This is mainly due to Trump's governance policies, which will reduce the stimulating effect of geopolitical risks on gold prices; the pace of global central bank gold purchases is slowing down; and gold prices are already seriously overvalued.

Qu Rui, from the research and development department of Dongfang Jincheng, believes that the price of gold may trend weakly this week. In the short term, with the end of the US election and the completion of the "Trump trade" for nearly a month, profit-taking by long positions will create downward pressure on gold prices. In addition, the US inflation data for October will be released this week. Strong used car prices and seasonal support may lead to sticky US CPI and PPI numbers for October, causing market expectations of rate cuts to fall, putting pressure on gold prices once again.

There is still an upside potential of 11% in the medium to long term.

Although the short-term gold price may trend weakly, institutions remain bullish on gold prices. UBS Group stated that investors may consider buying when the gold price retreats to around $2600 per ounce, and maintains a target price of $2900 per ounce for the next 12 months. This implies an additional 11% upside potential from the current price.

UBS believes that the current decline in gold prices is overreacted. In the past twenty-four US elections, the median change in gold prices has remained relatively flat on the second day after the election, with a median decline slightly above 3% in the following month. While the end of the election did eliminate some uncertainties and risks, the recent decline in gold prices seems somewhat excessive.

Furthermore, US Treasury yields and the US dollar may resume a downward trend in the next 6-9 months, and as the US dollar and US Treasury yields are usually inversely related to gold prices, this is one of the reasons UBS believes will support gold prices. "As growth and inflation slow down, US Treasury yields may decline. At the same time, due to the narrowing interest rate differentials between the US dollar and other currencies and significant fiscal and current account deficits in the US, the US dollar may weaken in the medium term. It is expected that by the first quarter of 2025, the yield on 10-year US Treasury bonds may fall from the current approximately 4.30% to around 3.50%; by the second quarter of 2025, the US dollar against the euro, pound, and Australian dollar will weaken.

"In the medium to long term, if inflation stickiness is significant, the potential secondary inflation risks in the US will rise accordingly, coupled with ongoing geopolitical turmoil, the inflation hedge and safe-haven nature of gold will continue to support gold prices," Qu Rui also stated.