Gold market remains under significant selling pressure as the Trump trade continues.
The gold price (XAUUSD) fell to its lowest level since September 19, around $2,550, during the early part of the European session on Thursday. The US Dollar (USD) continues to rise as investors anticipate expansionary policies from US President-elect Donald Trump. This, in turn, regarded as a major component pulling the commodity lower for the fifth consecutive day.
Meanwhile, Trump proposes to boost Tariffs on imports may boost inflation and push the Federal Reserve (Fed) to suspend its easing cycle. Furthermore, the US inflation numbers reported on Wednesday indicated that progress toward reduced prices was modest. This supports higher US Treasury bond yields and adds to a shift away from the non-yielding gold price.
Gold price bears continue their strong position despite broad-based USD strength and rising US government yields.
The US Bureau of Labor Statistics stated on Wednesday that the headline US Consumer Price Index (CPI) increased by 0.2% in October and 2.6% over the previous year.
The core gauge, which excludes the more volatile food and energy categories, grew by 0.3% last month and 3.3% when compared to the same time period last year year.
The statistics confirmed market expectations that the US Federal Reserve will decrease interest rates for the third time in December, amidst a deteriorating job market.
Rising US bond yields help to drive flows away from the non-yielding yellow metal.
According to CME Group’s FedWatch Tool, the probability of another 25-basis-point rate drop at the upcoming FOMC meeting has risen to more than 80% from less than 60% on Tuesday.
Dallas President Lorie Logan commented on the study, saying that while the central bank has made significant headway in lowering inflation, it should move with caution.
St. Louis Fed President Alberto Musalem stated that the likelihood of inflation rising has increase and that sticky inflation makes it harder for the central bank to continue to lower interest rates.
Kansas Federal Reserve President Jeffrey Schmid made a rare appearance said it remains to be seen how much farther the US central bank will decrease rates and where they will settle.
US President-elect Donald Trump’s pledges of tax cuts and greater tariffs on imports may exacerbate inflation, restricting the Fed’s ability to decrease rates in the future.
Trump’s trade confidence keeps the 10-year US government bond yield above a multi-month high, lifting the US dollar to its highest level since November 2023.
The customary Weekly Initial Jobless Claims and the Producer Price Index will be release on Thursday in the United States, before Fed Chair Jerome Powell speaks.
