Peace Negotiation News Moves the Market, Gold Faces Short-term Pressure
(North America) On Tuesday, November 25, international gold prices slightly declined amidst fluctuations, as the market exhibited hesitation with intertwined geopolitical and macroeconomic signals. Traders were attentive to the intense talks surrounding a potential peace agreement between the US and Ukraine, as well as the US and Russia, while also digesting the latest US retail and inflation data. These dual factors led some investors to reduce positions at high gold prices, causing short-term pressure on gold.
Reports from multiple media outlets indicate that after several rounds of contacts between the US and Ukraine in Geneva and Abu Dhabi, the initial 28-point plan has been reduced to 19 points, achieving a principled consensus on most issues. Although details have not been disclosed, the market interprets this as a new diplomatic window for the Russia-Ukraine conflict, with the decline in geopolitical premiums being a primary reason for gold's correction.
Differences in Plan Versions Remain, Europe Takes a Harder Stance
It is reported that Steve Witkoff, the US envoy, and Kirill Dmitriev, Russia's chief negotiator, have engaged in preliminary discussions on some frameworks but have not reached a consensus. Informed sources reveal that after the US's initial framework took shape, Ukraine and its European allies quickly proposed a tougher alternative version, which Russia criticized as "completely unacceptable."
This indicates that even as negotiation signs emerge, the path remains quite complex. For the market, this complicated negotiation scenario weakens hedge demand and brings uncertainty to the subsequent gold price trend.
Ukraine Wants Direct Talks with Trump, Territorial Issues as Focal Point
The political level of talks is escalating further. Andriy Yermak, Chief of Staff to Ukrainian President Zelensky, stated their hope to arrange face-to-face talks between Zelensky and Trump "within a few days," potentially scheduled around Thanksgiving.
Yermak emphasized that territorial ownership is a sensitive issue that must be negotiated directly by the presidents. US officials revealed that a meeting might occur in the coming days, although the timing has not been finalized. Trump is expected to stay at Mar-a-Lago until Sunday, seen as a potential meeting window.
The market believes that if high-level political interactions accelerate, the geopolitical hedge premium on gold will continue to be compressed.
US Economic Data Moderate, Gold's Macroeconomic Support Remains
Besides geopolitical factors, the latest US economic data also impacted gold prices. September retail sales growth was weaker than expected, while the PPI, delayed due to shutdowns, showed moderate growth at the wholesale level, with core inflation remaining under control.
Analysts pointed out that this data did not change market expectations for the Federal Reserve to continue cutting interest rates next year, but it was also not enough to trigger new hedging purchases.
Ole Hansen, Chief Commodity Strategist at Saxo Bank, commented:
“The potential peace agreement reduces geopolitical risks, while some investors are reducing gold holdings to cover losses from stock market declines, prompting a short-term pullback in gold prices.”
He believes gold has not lost its macroeconomic support, especially as policy cycles near a turning point, and global real interest rate expectations weaken, making gold attractive in the long term.
Outlook: Hedge Demand Cools, but Gold Still Under Multiple Support Systems
Overall, the gold market is entering a short-term sensitive period:
— The pace of Russia-Ukraine negotiations will determine whether the hedge premium can continue to decline;
— US economic data and policy expectations will continue to impact the market base;
— Stock market volatility and capital demand may further amplify short-term fluctuations in gold prices.
Although gold prices slightly weakened on the day, amidst the interplay of multiple factors such as geopolitics, interest rate expectations, and the dollar trend, gold maintains a stable macroeconomic support framework.
