- Gold prices declined as the US Dollar surged to a four-month high amid increased demand from Trump-related trades.
- Precious metals face downward pressure as safe-haven demand wanes with growing market optimism.
- Non-yielding XAU/USD struggles as US Treasury yields hover near their highest levels since July.
Gold prices (XAU/USD) continue their slide for a second consecutive session on Thursday, pressured by a stronger US Dollar in the wake of former President Donald Trump’s victory in the US election.
The decline in safe-haven demand reflects increased market optimism and “Trump trades,” as Trump’s clear win has reduced concerns about a contested outcome. This has weakened demand for gold, which previously benefited from election-related uncertainty.
Looking ahead, the US Federal Reserve’s policy decision on Thursday is in focus, with markets expecting a 25 basis point rate cut. Such a move could provide some support for gold, as lower interest rates reduce the opportunity cost of holding non-yielding assets.
The CME FedWatch Tool currently shows a 98.1% probability of a quarter-point rate cut by the Fed in November.
Daily Digest Market Movers: Gold price under pressure amid optimism and Trump trades
- Gold’s decline was exacerbated by a surge in US Treasury yields, which reached their highest levels since July on Wednesday, with 2-year and 10-year yields climbing to 4.31% and 4.47%, respectively.
- Gold may find some support from inflation expectations, as Trump’s economic policies, including proposed tariffs and fiscal deficit increases, could stoke inflation, prompting investors to seek safe-haven assets.
- Trump’s policy stance, which includes tariffs and tax cuts, could conflict with the Federal Reserve’s anti-inflationary efforts, potentially leading the Fed to adopt a more cautious approach to easing.
- Gold prices remained unaffected by geopolitical concerns, including Iran’s recent threat of retaliation against Israel for an October 26 attack.
- US economic data remains robust; the ISM Services PMI rose to 56.0 in October, beating forecasts, while the S&P Global Services PMI recorded a slight decline to 55.0, missing expectations.
Technical Outlook: Gold targets three-week low near $2,603.53, with further support at $2,500
Gold currently trades around $2,650 per troy ounce, with technical indicators suggesting continued bearish momentum. Prices remain below the nine- and 14-day EMAs on the daily chart, while the 14-day RSI also trends below 50, favoring a bearish outlook.
On the downside, immediate support is at the three-week low of $2,603.53. A break below this level could press gold toward the psychological $2,500 mark.
In terms of resistance, $2,700 serves as the initial barrier, followed by the nine-day EMA at $2,711.40. A break above this could open the path for a retest of the October 31 high of $2,790.11.
XAU/USD: Daily Chart
