Gold prices fell for the second consecutive trading day on Monday (November 11th) due to the strength of the US dollar and rising risk appetite. Analysts believe that under the leadership of President-elect Donald Trump, the Federal Reserve will adopt a cautious policy.
By 11:12 Greenwich Mean Time, spot gold fell by 0.8% to $2,662.59 per ounce, while US gold futures dropped 0.9% to $2,669.40 per ounce.
According to Reuters, Ricardo Evangelist, senior analyst at ActivTrades, stated that “the decline in gold prices is mainly due to the strength of the US dollar, rising bond yields, and increased risk appetite in financial markets – a trend that has strengthened since Donald Trump’s victory in the presidential election last week.”
The US dollar index rose by 0.3% after recording a weekly gain last week, causing a decrease in gold’s attractiveness to holders of other currencies. The S&P 500 index recorded its largest weekly gain in a year when it closed on Friday, November 8th. Investors are hopeful that Trump’s return to the White House will lead to tax cuts and deregulation. The Federal Reserve cut interest rates by 25 basis points last Thursday, further boosting the stock market this week.
Meanwhile, with Trump’s return to the White House, the prospect of increased tariffs may keep interest rates high. This led to gold experiencing its worst week in over five months.
IG market strategist Yeap Jun Rong mentioned, “Trump’s election directly led to a decrease in market expectations for interest rate cuts in 2025. The potential for a ‘clean sweep’ by the (Republican) party means his tax and spending plans are almost unimpeded, along with his stance on increasing tariffs.”
“Expectations are for the Federal Reserve to be more cautious in its future easing processes, which could exert upward pressure on yields and raise the US dollar, thereby limiting gold prices.”
According to CME Fedwatch tool, traders now believe there is a 65% probability that the Federal Reserve will cut interest rates by 25 basis points in December, compared to around 83% before Trump’s victory.
Several Federal Reserve officials, including Chairman Jerome Powell, will be delivering speeches this week. US consumer and producer price index data, weekly jobless claims, and retail sales data will also be published this week.
Gold has been a focus in the financial markets this year, continuously rising and making 2024 a historic year for precious metals. On January 1st, gold was priced at $2,063.73 per ounce, rising by over $600 per ounce in less than a year. Many experts predict that gold prices will surpass the $3,000 per ounce mark before the end of the year. Prices of many precious metals have also reached new highs.
On Monday, spot silver rose by 0.1% to $31.32 per ounce, platinum increased by 0.9% to $977.65 per ounce, and palladium fell by 0.1% to $987.59 per ounce.
CBS reported that while rate cuts by the Federal Reserve may impact gold prices, the effect may not be as significant as some expect. However, due to strong global demand for gold, especially from central banks worldwide, precious metals continue to attract institutional and retail investors. This trend could contribute to a further increase in gold prices.