• Gold declines as Trump’s win reduces political risk; focus on potential inflationary policies.
• US Dollar recovery pressures Bullion despite lower Treasury yields.
• Powell signals gradual rate adjustments, leaving Fed’s future path open amid economic strength.

Gold prices had fallen on Friday as the Greenback stages a recovery despite falling US Treasury yields. Traders continued to digest Donald Trump’s victory in the US election, and they reduced their exposure on the so-called “Trump trade” due to uncertainty over tariffs. The XAU/USD trades at $2,688, down over 0.67%.

US equities extended their gains, shrugging off election jitters, which were the main drivers of the Bullion’s advance. However, risk over US politics has faded, and market participants would look toward Trump’s policies.

Following his victory, the US Dollar strengthened, even though investors expect a less dovish Federal Reserve (Fed). Some of Trump’s policies are seen as inflation prone, which would exert pressure on the US central bank.

On Thursday, the Fed reduced interest rates, acknowledging a strong economy, a cooling labor market, and an evolving disinflation process. However, Fed officials commented that inflation “remains somewhat elevated” despite approaching the 2% target.

Fed Chair Jerome Powell failed to provide forward guidance on monetary policy and kept his options open at upcoming meetings. He emphasized that the Fed could afford to take its time to lower rates due to the strong economy. He acknowledged that policy remains restrictive, even after today’s rate cut, as officials aim to bring rates to neutral levels.