Gold prices held above $2,100 on Wednesday, near a record high set in the previous session, as hopes of a U.S. interest rate cut by mid-year grew, while traders awaited comments from Federal Reserve Chairman Jerome Powell on the health of the economy. .
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Gold prices fell about 3% after President-elect Donald Trump named Scott Bessent as Treasury Secretary, reports Israel and Hezbollah close to ceasefire agreement It also weakens the appeal of safe-haven metals.
Factset data showed that gold spot prices fell 3.44% to $2,616.80 an ounce. Gold futures on the New York Mercantile Exchange were trading at $2,628.5.
Nicky Shiels, head of metals strategy at MKS Pamp, said: “The price of gold fell by about $100 today, which is as severe as the scale and speed of the sell-off after the US election on November 6.”
Hills added that a potential ceasefire between Israel and Hezbollah and Bessant’s appointment were key factors in the gold price sell-off.
On Monday, the Israeli ambassador To the United Nations Danny Danon announces Israel is moving towards ceasefire cooperation with Hezbollah, but he stressed that this “won’t happen overnight” and noted that some issues remained unresolved.
white house national security adviser John Kirby Called discussions on the ceasefire agreement “productive”.
“But nothing will be done until everything is done, and it’s not done yet,” he said.
Major U.S. benchmarks rose to record highs on Monday, with investors casting hedge fund manager Bessant as a supporter of stocks.
Daniel Ghali, commodities strategist at TD Securities, said a “drying up of buying” in gold also contributed to the reversal, stressing that strong physical demand from Asian central banks and traders has weakened significantly over the past few months. .
Hills said there was heavy selling in China overnight on the Shanghai Gold Exchange.
Gurry added that gold buying activity is also likely to “continue to be constrained” by the Fed’s sharply different outlook, while there is no longer a risk that Fed policy will be “too accommodative.”
Higher interest rates tend to reduce the appeal of non-interest-bearing gold compared with Treasuries, a competing safe-haven asset.
A December rate cut no longer appears certain amid uncertainty over the potential impact of President-elect Donald Trump’s policies on key sectors of the economy.
According to data from CME Group, there is a 56% chance that the Federal Reserve will lower the benchmark interest rate during its December 17-18 meeting. Fed Watch Measured, well below the 75% chance of a month or so.
“In the short term gold should be headed back to $2,500, not $3,000, a move that confirms the Nov. 14 rally was a dead cat rally,” Shiels said.
After Trump’s victory, gold prices fell to two-month lows before rebounding to the $2,700 level.
Rua Gold CEO Robert Eckford told CNBC that with the Trump administration taking office and major announcements on tariffs, price volatility is expected to continue over the next four months, and his stance on the Russia-Ukraine war will become an even greater focus.
Similar to when conflict in the Middle East first breaks out, gold prices tend to react very violently initially and then adjust as economic factors come back into focus, Eckford added, insisting that gold prices will still rise to $3,000 in 2025.
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