Gold price fell as the US dollar rose to a four-month high owing to Trump trades.
On Thursday, the gold price (XAUUSD) fell for the second consecutive session. The dollar-denominated precious metal under pressure from a higher US Dollar (USD) following former President Donald Trump’s victory in the US election.
The non-yielding XAUUSD faces hurdles as US Treasury yields reach their highest levels since July.
Gold prices are under pressure as safe-haven flows fall amid market confidence and “Trump trades.” This move is driven by the clarity of a presidential victory, and the market had Previously, I anticipated a contentious outcome.
The US Federal Reserve’s (Fed) policy decision will be watched on Thursday. Markets anticipate a modest 25 basis point rate drop this week. Lower interest rates may benefit gold by lowering the opportunity cost of keeping non-interest-bearing assets.
The CME FedWatch Tool predicts a 98.1% chance of a quarter-point rate drop from the Fed in November.
Daily Market Movers: Gold prices fall owing to market optimism, Trump trades.
Non-yielding Gold experienced downward pressure as US Treasury yields rose to their highest level since July on Wednesday. The two-year and ten-year US Treasury bond yields increased to 4.31% and 4.47%, respectively.
Republican Donald Trump may bring to rising inflation, which might support the gold price pledged to drastically increase trade tariffs. This could lead investors to seek safe-haven assets as a hedge against long-term inflation threats.
Trump’s economic policies include imposing tariffs, expanding the federal deficit, and lowering taxes. These suggestions contradict the Federal Reserve’s efforts to keep inflation under control, causing the US central bank to ease monetary policy gradually.
Concerns about Iran’s plans for a retaliation strike in response to Israel’s attack on its land on October 26 appear to have had no impact on the safe-haven XAU/USD fall.
On Tuesday, the US ISM Services Purchasing Managers Index rose to 56.0 in October from 54.9 in September, above the forecast of 53.8. In comparison, the S&P Global Services PMI reported at 55.0 in October, somewhat Below the previous reading and the projected 55.3.
