On Wednesday (November 13), during the Asian market early trading session, spot gold experienced narrow fluctuations, currently trading around $2598.56 per ounce, continuing its three-day losing streak. A strong U.S. dollar has weighed on gold prices, which fell to a near two-month low on Tuesday, briefly dropping below the $2600 barrier, reaching a low of $2589.61 per ounce, and eventually closing at $2598.05. The U.S. dollar index rose to a more than half-year high, mainly driven by market optimism regarding Trump's second-term policies, with the possibility of higher tariffs leading to strong dollar demand from investors.
The strengthening dollar raised the cost of gold purchases for holders of other currencies, and U.S. Treasury yields also climbed. Analysts believe that this wave of gold adjustment may be a normal pullback within a bullish market. Technically, gold has support at $2600, and if inflation expectations heat up, gold may rise again.
Data shows that the holdings of the world's largest gold ETF - SPDR Gold Trust - continued to decline by 1.44 tons to 870.53 tons, its lowest since September 13. The market is closely watching U.S. economic data this week, including Wednesday's release of October CPI data and speeches by Federal Reserve Chairman Powell and other officials.
On Tuesday, two Federal Reserve officials stated that U.S. monetary policy still retains some level of tightening and that there is room for further rate cuts in the future, though the frequency and extent remain uncertain. Minneapolis Federal Reserve President Kashkari mentioned at an event that the Fed maintains a moderately tight stance, and further rate cuts will depend on economic performance.
The dollar rose to a six-and-a-half month high against major currencies on Tuesday, with the market expecting higher tariff policies to increase prices and narrow the Fed's room for rate cuts. The dollar index climbed 0.51% to 105.96, reaching a high of 106.17, the highest since early May. With Trump's Republican advantages in Congress, the market anticipates policies promoting tax cuts and regulatory relaxation.
Trump further warned that if the Eurozone fails to meet the predetermined purchase levels of American products, especially automobiles, it will face "significant consequences," and threatened tariffs of up to 60% on major Asian countries.
Additionally, U.S. Treasury yields hit a new high since July, with two-year yields rising to 4.367%, indicating investor caution about the inflationary pressures potentially triggered by Trump's policies, expecting the Fed's rate cut pace to slow due to inflation prospects. The market is also closely monitoring Wednesday's release of CPI data; if the inflation rate exceeds expectations, coupled with the advancement of tariff policies, bond market tensions might intensify.
