Gold fallen sharply from a three-week high in response to the risk-on environment.
The gold price (XAUUSD) experienced an intraday turnaround after reaching a nearly three-week high around $2,721-2,722 and snapping a five-day winning streak at the start of the new week. US President-elect Donald Trump nominated Scott Bessent as Treasury Secretary, removing a major source of uncertainty for markets. In addition, reports that Israel was close to reaching a cease-fire with the military group Hezbollah in Lebanon boosted Investors are confident. As a result, flows away from traditional safe-haven assets continue, and the precious metal remains heavily offered heading into the European session.
Bets on slower Fed rate cuts also drive outflows from the non-yielding yellow metal.
Expectations that Trump’s proposed policies will reignite inflation and limit the Federal Reserve’s (Fed) ability to cut interest rates are another factor undermining the non-yielding gold price. Meanwhile, Bessent has spoken out about the need to control the deficit, and his nomination provides some relief to bond investors. This results in a sharp drop in US Treasury bond yields, prompting some US Dollar (USD) profit-taking following the post-US election run-up to the highest level since November 2022, potentially limiting any meaningful depreciation for the XAUUSD.
Daily Market Movers:Gold prices are weighed down decreased demand for safe-haven assets
The risk-on sentiment fails to help the gold price capitalize on last week’s strong gains, resulting in an intraday correction from a three-week high on Monday.
The nomination of Scott Bessent as US Treasury Secretary, as well as the de-escalation of the long-running Middle East conflict, boosts investor confidence as the new week begins.
According to media reports, Israel and the militant group Hezbollah in Lebanon are on the verge of reaching a ceasefire agreement, though the agreement has yet to be finalized.
Furthermore, optimism about more business-friendly policies from the new Trump administration contributes to a positive tone in the equity markets.
S&P Global’s Composite US PMI increased to 55.3 in November, its highest level since April 2022, and suggested That growth most likely accelerated in the fourth quarter.
Recent hawkish remarks from several Federal Reserve policymakers, as well as potential inflation surprises, may support an interest rate decision to remain on hold in December.
According to the CME Group’s FedWatch Tool, traders are currently pricing in a slightly more than 55% chance of the Fed cutting interest rates by 25 basis points next month.
Investors will closely scrutinize the November FOMC meeting minutes.
Investors will closely scrutinize the November FOMC meeting minutes as well as the US Personal Consumption and Expenditure (PCE) Price Index data.
Bessent’s conservative fiscal policy views cause a correction in US Treasury bond yields, prompting some US Dollar profit-taking after a two-year high.
