Global gold prices plunged by nearly $100 per ounce during Monday’s trading session (November 25), ending a five-day winning streak that had pushed the precious metal to a near three-week high the previous week. Risk aversion sentiment waned following news of a potential agreement between Israel and Lebanon to end the conflict between Israel and Hezbollah.
Additionally, President-elect Donald Trump’s selection of Scott Bessent as his nominee for the position of Treasury Secretary further dampened the appeal of gold.
At the close of trading, spot gold tumbled by $91.6 per ounce compared to the previous week’s close, equivalent to a decline of nearly 3.4%, to $2,625.3 per ounce, according to data from the Kitco exchange.
As of early Tuesday (November 26) Vietnam time, gold prices in the Asian market edged up by $2.3 per ounce compared to the US session close, equivalent to a gain of 0.09%, trading at $2,627.6 per ounce. Converted at Vietcombank’s selling exchange rate, this price is equivalent to about VND 80.7 million per tael, a decrease of VND 2.8 million per tael compared to the previous day.
Vietcombank quoted the dollar at VND 25,167 (buying) and VND 25,506 (selling) in the early morning.
Analysts attributed the sharp decline in gold prices to a combination of factors, including profit-taking after five consecutive days of gains and unexpected negative developments. As investors sought to lock in profits, the market quickly shifted into a sell-off mode.
According to Daniel Ghali, a strategist at TD Securities, the nomination of Scott Bessent by President Trump as the next Treasury Secretary has reduced the risk premium for gold.
On Friday, Trump announced his decision to nominate Bessent, the founder of hedge fund management firm Key Square Group, as the head of the Treasury Department. Given Bessent’s experience and personality, observers believe that in this position, he will bring benefits to the US stock market. The market also expects Bessent to help temper some of Trump’s more extreme protectionist policies, such as the imposition of heavy tariffs on imported goods.
Some investors and experts view Bessent as a less negative figure in the event of a new trade war between the US and the rest of the world.
“Furthermore, news of a potential agreement between Israel and Lebanon to end the conflict with Hezbollah added downward pressure on gold prices,” Ghali said.
According to reports citing anonymous US officials, Israel and Lebanon have agreed on the terms of a deal to end the conflict between Israel and Hezbollah.
On Monday, Israel declared that it was moving towards a ceasefire agreement with Hezbollah, but some issues remained to be resolved. Lebanese officials expressed cautious optimism but questioned the trustworthiness of Israeli Prime Minister Benjamin Netanyahu.
Gold, a traditional safe-haven asset, tends to attract investors during times of economic and geopolitical uncertainty. The previous week’s tensions between Russia and Ukraine were a significant factor in the sharp rise in gold prices. Over that week, gold prices surged by nearly 6%, reaching their highest level since the beginning of the month.
With the Thanksgiving holiday on Thursday and the Black Friday shopping festival on Friday, trading activity on international gold exchanges is expected to be thinner this week. Market participants will likely focus their attention on interest rate prospects, with the release of key inflation data and the Fed’s meeting minutes later in the week.
On Wednesday, the US Department of Commerce will publish the Personal Consumption Expenditures (PCE) price index for October, the Fed’s preferred measure of inflation. The Fed’s latest policy meeting minutes will also be released ahead of Thanksgiving.
According to the FedWatch Tool from the CME exchange, market participants are now fully pricing in a rate cut for the December meeting, with odds currently standing at 100%. Just last week, the probability of a 0.25 percentage point rate cut at this meeting was above 50%.
“I still believe the Fed will cut rates by 0.25 percentage points in December, but recent comments from Fed officials have signaled a more cautious approach for 2025, which could pose a challenge for gold,” said Peter Grant, Vice President of Zaner Metals.
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