1160 is not the bottom at all! Gold’s nightmare has just begun, Bitcoin will soar

After failing to test 1180 yesterday, gold prices quickly fell back to around 1166. Since Trump won the election, gold has fallen by $180.

Before the US election, investors expected that Trump's election would be good for gold, but the result was beyond everyone's expectations.

So what impact does Trump have on gold? Let’s see what International Perspective, a precious metals research organization, thinks.

International Perspective believes that Trump is not as good for gold as expected earlier. In fact, Trump is a big negative for gold. His coming to power will lead to the Federal Reserve raising interest rates faster and cause the depreciation of the RMB, which may lead to China restricting gold imports.

International Perspective said that in the short term, the market expects the probability of the Federal Reserve raising interest rates next week to be 95%. Although the current gold price has already reflected this expectation, gold will still be under pressure if the Federal Reserve does raise interest rates.

However, some economists have warned that the Federal Reserve will not raise interest rates, but the probability of this is very low because all data show that the US economy is good and maintaining low interest rates is no longer appropriate.

In the medium term, after December, gold prices will continue to be hit by the Fed's interest rate hike expectations next year. Trump's more fiscal stimulus measures will force the Fed to raise interest rates faster, while rising bond yields will also put pressure on gold prices.

However, the positive factor is that fiscal stimulus will also bring about inflation. If inflation gets out of control, gold prices will also be boosted.

In the long run, Trump's policies may cause the RMB to depreciate significantly. Chinese investors will buy dollars and gold for safe havens, which will cause the RMB to depreciate further. Eventually, the government may have to take measures to restrict gold imports. At that time, Chinese investors may flock to Bitcoin. Saxo Bank Chief Economist Steen JaKObsen believes that Bitcoin is expected to triple next year, from the current level of $700 to above $2,100.

International Perspective concluded that gold will continue to suffer in the next few months because Trump will increase fiscal spending after taking office, prompting the Federal Reserve to raise interest rates more, and may also cause a sharp depreciation of the RMB, which means that the decline in gold may only be the beginning. The only thing to be vigilant about is whether inflation exceeds expectations.