Gold prices experienced a notable decline on November 25, 2024, dropping to $2,637 per ounce, a decrease of 2.7% in intraday trading. This downturn follows a robust five-day rally that had propelled prices to a three-week high. The retreat can be attributed to two primary factors: profit-taking by investors and the recent announcement of Scott Bessent as the new U.S. Treasury Secretary, which has tempered the demand for gold as a safe-haven asset.
Gold had reached its highest price since early November during Asian trading hours, following its most significant weekly gain in nearly two years. Investors capitalized on this surge, leading to a natural correction in prices as they sought to lock in profits. According to UBS analyst Giovanni Staunovo, the profit-taking was expected after such a solid rally, especially given the recent highs achieved by gold prices.
The nomination of Scott Bessent by President-elect Donald Trump has also influenced market sentiment. Bessent, known for his background in hedge fund management, is perceived as someone who understands market dynamics and may adopt a more measured approach towards trade policies. This has led some market participants to believe that his appointment could lessen the likelihood of aggressive tariffs on U.S. trade partners, thereby reducing some of the economic uncertainties that typically drive investors towards gold.
As traders digest these developments, they are also closely monitoring upcoming economic indicators that could further influence gold prices. Key reports include the minutes from the Federal Reserve’s November FOMC meeting and updates on GDP data and core PCE figures, all scheduled for release this week. Current market expectations suggest a 56% probability of a 25 basis points rate cut by the Fed at its next meeting on December 18.
Frank Watson, a market analyst at Kinesis Money, noted that while there is still anticipation for a rate cut, the critical aspect will be whether future Fed dot plots indicate fewer rate cuts in the coming year. Such insights could significantly shape investor strategies moving forward.
From a technical standpoint, gold’s sharp decline has brought it below key support levels. The price fell below the 23.6% Fibonacci retracement level of its recent recovery from a two-month low reached on November 14. The next significant support is around the $2,650 area, which traders will watch closely for potential further declines. Conversely, resistance levels are forming near $2,677-$2,678 and again at $2,721-$2,722.
Gold’s recent price action reflects a complex interplay between profit-taking after substantial gains and shifting market sentiment following political developments in the U.S. Investors remain vigilant as they await critical economic data that could influence monetary policy and impact gold’s status as a safe-haven investment. As always, fluctuations in gold prices will continue to be closely tied to broader economic indicators and geopolitical developments.
