Gold prices experienced a sharp drop on Monday. On the New York Mercantile Exchange (COMEX), December gold futures fell 3.45%, closing at $2,618.50 per ounce. Spot gold declined by 3.5%, settling at $2,621.85 per ounce.
CNBC attributed the sell-off to declining safe-haven demand following reports of an imminent ceasefire between Israel and the Lebanese militant group Hezbollah. This marked the steepest single-day drop in gold prices in six days.
Bart Melek, global head of commodity strategy at TD Securities, told Bloomberg that gold prices positively correlate with risk levels, explaining that gold tends to lose its luster as risk subsides.
The nomination of Scott Bessent, founder of hedge fund Key Square Group and a market-friendly figure, as Treasury Secretary in a potential second Trump administration has further eased U.S.-related risk premiums.
This development has reduced gold’s appeal as optimism grows regarding stability in the U.S. economy and financial markets.
Market participants are now turning their attention to key economic indicators, including the upcoming release of the November Federal Open Market Committee (FOMC) meeting minutes, preliminary U.S. GDP figures, and the core PCE price index ahead of the year’s final FOMC meeting.
Peter Grant, chief strategist at Zaner Metals, cautioned that although the Fed is expected to cut its rate by 25 basis points next month, recent statements from Fed officials suggest a more cautious approach as the new year approaches. He noted that this could potentially create headwinds for gold prices.
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