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The Donald Trump premium looks like it's fading off gold prices

Gold is giving back some of its election season gains, and strategists say it's the Donald Trump premium fading.

"What we've seen this week is a return of risk-on appetite. What the market started to sense Monday and even more today is there's going to be a Hillary Clinton victory, probably a divided Congress and not getting much done. The markets like that," said Jim Wyckoff, senior analyst at Kitco.

Gold futures for December declined 0.4 percent to $1,274.50 per ounce on Tuesday, but were as high as $1,295 earlier in the session. The loss was on top of a 2 percent decline Monday.

"I think it's the Hillary factor," said Kevin Grady, president of Phoenix Futures and Options. "Gold had a $10 rally" before selling off Tuesday. … It's the jitteriness of the market." He said the market perception is that Clinton will defeat Trump, and she does not cause the uncertainty that Trump does.

Gold futures hit a high of $1309.30 last week when Trump was gaining in the polls. "The market is factoring out the potential for a Trump victory. … I suspect if we do see a Hillary victory, you're going to see gold between $1,243 and $1,300," he said. "If Trump wins, you're going to see a whole different ball game."

Trump was good for gold when it was perceived that a renewed FBI investigation into Clinton would help him in the race for the White House. Grady said there was about a $50 per ounce premium built in for Trump.

"I still think down below the market, if you see the market sell off because Hillary wins the election, I think it's a buying opportunity. I don't see any reason why gold should collapse if Hillary Clinton gets in," he said. He added that there are still a lot of foreign buyers in gold, given the negative yields in Europe and Japan.

When Trump gained in the polls, gold rose. "I think he was just an unknown. There was uncertainty in the market and that's what the equity markets were showing you also," said Grady.

Grady said he, like everyone else, will be watching the election results roll in after polls close: "I think the market is going to be moving as the polls are coming in. You're going to see the S&P and the gold market reacting."

Peter Boockvar, chief market strategist at the Lindsey Group, said gold began to move lower as the S&P 500 and stocks moved higher, in a correlated risk-on trade. "The big picture with gold is not who the next president is. It's where the dollar goes, and it's monetary policy, not just here but overseas," he said.