Gold prices extended their decline to a near two-month low Thursday amid risk-on sentiment and as the dollar continues to strengthen following Donald Trump’s election victory last week.

Spot prices of the yellow metal have dropped nearly 7% since the election results last week to $2,559.2 per ounce. Gold futures on the New York Mercantile exchange were trading at $2,567.3.

The recent slide — gold has declined in six of the seven sessions since Trump’s victory — follows a series of record-breaking milestones for bullion over the past year.

“There’s a pause in the bull market in gold and silver, and that may continue for the next couple of weeks or so,” said Citi’s global head of commodities research Maximilian Layton.

He elaborated that gold prices are likely to trade lower as U.S. equities rally on prospects of lower tax and regulations. Trump’s return to the White House had sent U.S. stocks to record highs though the rally has taken a breather.

The postelection risk-on sentiment has also lifted cryptocurrencies, with bitcoin briefly trading above $93,000 for the first time on Wednesday on hopes that Trump will make good on a slew of promises to the industry.

“Trump looking like he’s going to have a red sweep and higher deregulation, lower tax environment has led money into equities, money into bitcoin, and money out of gold,” Layton told CNBC. 

The dollar index has also climbed to a one-year high, making greenback-priced gold expensive for holders of other currencies.

“The rise in the U.S. dollar reflects how markets have priced in Trump’s inflationary policy agenda, which primarily includes tax cuts and tariffs,” Commonwealth Bank of Australia’s Vivek Dhar wrote in a note dated Wednesday. 

Equities are in “euphoria territory” right now as they price in market-friendly outcomes of the elections, said Nicky Shiels, head of metals strategy at treading services firm MKS Pamp. “Until this Trump trade honeymoon phase runs its course, gold and silver are amidst repricing to a less bullish trajectory,” she said.

In spite of the slide in gold prices, market watchers are still optimistic on the fundamentals of the bullion.

The underlying drivers of the gold market are still in place, Layton said. After Trump’s election victory, there has been increasing speculation about his tariff proposals and their potential impact on the global economy.

“As that happens, people will be buying gold and silver to hedge those downside risks,” said Layton.

Additionally, central bank demand for gold is expected to remain strong, if not grow, due to the U.S. fiscal outlook and increasing geopolitical tensions, according to financial services firm Canaccord Genuity. Central banks purchased record amount of gold in the first half of 2024.

“If President-elect Trump’s second term is anything like his first, with a confrontational approach to friends and foes alike, we believe strong international demand for gold as a reserve asset is likely to continue relative to demand for treasuries,” the bank’s analysts wrote in a report.

A mix of rising debt, geopolitical tensions and central bank demand are expected to support higher gold prices, said Canaccord Genuity.