Markets appear to believe that a Trump victory will lead to major infrastructure spending and much more aggressive Fed tightening. As a result, gold prices have fallen. While some fiscal stimulus is likely, we don’t think that it will be all negative for gold even in the face of additional monetary tightening. What’s more, investors are ignoring a whole range of policies that have been advocated by Donald Trump during his campaign which could be inflationary or negative for growth and global risk appetite. Hence, we expect the current weakness in gold prices to prove short-lived.
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