On Monday (November 11th), during the Asian market early session, spot gold experienced slight fluctuations, with the trading price around $2,683.62 per ounce. Last Friday, gold fell by 0.8%, closing at $2,684.37 per ounce, marking a weekly decline of 1.85%, the largest since over five months. The strengthening of the dollar and market reactions to Trump's election victory and its potential impact on interest rate policies diverted funds to risk assets, weakening gold's appeal as a safe haven.
Gold had experienced a strong uptrend earlier this year, especially after the Federal Reserve cut interest rates by 50 basis points in September. However, after last week's 25 basis point cut, the Fed's cautious stance reduced the likelihood of further rate cuts. With expectations of Trump's policies, including tariffs and tax cuts, the market anticipates that economic growth and inflation might accelerate, narrowing the space for further rate cuts by the Fed and putting pressure on gold. Interest rate futures data shows the market's expectation of a Fed rate cut in December has fallen from 72% last week to 64%.
Strong U.S. consumer confidence data also supported the dollar. Last Friday's survey showed U.S. consumer confidence reaching a seven-month high in early November, indicating stable economic prospects. Additionally, the U.S. Consumer Price Index (CPI) for October will be released on Wednesday, and retail sales data on Friday will further provide economic insights, potentially continuing to impact the dollar and gold performance.
Analysts point out that Trump's economic agenda might further boost economic growth, but specific policies remain uncertain. The election results prompted investors to reassess risk asset allocations, and in response to Trump's tax reduction and tariff expectations, U.S. Treasury bonds experienced a significant sell-off early last week, with expectations of continued economic growth and inflation.
On the geopolitical front, the Russia-Ukraine conflict persists, with the U.S. planning to accelerate military aid to Ukraine before its administration change. Additionally, tensions in the Middle East provide long-term support to gold prices, but are insufficient to offset current bearish pressures.
Market sentiment is noticeably divided. According to a survey, 64% of 14 analysts are bearish on the gold outlook, while only 21% are bullish, and 14% expect prices to consolidate. Among retail investors, 46% of the 249 participants are bullish, 36% are bearish, and 18% anticipate gold prices to consolidate. Despite the short-term bearish trend, retail investors remain optimistic about future prospects.
