Gold prices retreated after hitting a three-week high on Monday, snapping the five-day rally as the market witnessed some profit-taking with additional pressure from the announcement of fund manager Scott Bessent as the next U.S. Treasury Secretary.
In the UAE, gold rates fell significantly, with 24-carat gold declining by AED5.75 to AED323.50 and 22-carat gold losing AED5.5 to AED299.50. Meanwhile, 21-carat gold fell AED5.25 to AED290 and 18-carat gold dipped AED4.5 to AED248.50.
Globally, spot gold slipped 1.97 percent to $2,662.95 per ounce, as of 6:09 GMT, after hitting its highest since November 6 earlier in the session. Gold prices gained close to 35 percent in the last year, reaching an all-time high of $2,790.15 in late October.
Trump picks Bessent as Treasury Secretary
Gold prices dipped after a five-day rally due to some profit-taking and Trump’s pick of Bessent as U.S. Treasury Secretary, hinting at a tempered use of tariffs and easing U.S.-China trade uncertainty. President-elect Donald Trump had proposed a 60 percent tariff on Chinese goods and at least a 10 percent levy on all other imports during his campaign. Bessent has been vocal about the need to control the deficit. Bessent’s conservative views on fiscal policy triggered a decline in the U.S. Treasury bond yields and prompted some U.S. dollar profit-taking. Therefore, his nomination offered some relief to bond investors.
Gold is considered a safe investment during times of economic and political uncertainty.
Middle East conflict
In addition, reports that Israel was close to reaching a ceasefire with Lebanon boosted investor confidence, impacting the recent upward trend in gold prices. Moreover, optimism over more business-friendly policies from the new Trump administration remained supportive of positive sentiment around the equity markets.
Despite the sharp decline in the U.S. dollar, which usually supports bullion, gold prices fell on prospects of easing tensions in the Middle East.
Fed’s December rate cut
Expectations that Trump’s proposed policies could reignite inflation and limit the scope for the Fed to cut interest rates further impacted gold prices. The recent hawkish remarks from several Federal Reserve policymakers and potential inflation surprises may support a pause on cutting interest rates in December.
Last week, Chicago Federal Reserve president Austan Goolsbee reiterated his support for further U.S. interest rate cuts and his openness to slowing them down on Thursday. Meanwhile, New York Fed president John Williams said that the disinflationary process continues and added that the Fed funds rate will be lower by the end of 2025. Higher interest rates tend to make gold and other non-yielding assets less appealing to investors.
Traders currently see a 56.2 percent chance of another 25 basis points rate cut in December, compared to 62 percent last week, according to the CME Fedwatch tool.
S&P Global’s Composite US PMI rose to 55.3 in November, the highest level since April 2022, suggesting that growth probably accelerated in the fourth quarter. Investors this week will await the release of the Federal Reserve’s November FOMC meeting minutes, GDP data, and core PCE figures.
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Other precious metals
The precious metals market fell on Monday as gold prices lost their upward momentum. Spot silver lost 2.24 percent to $30.61 while platinum fell 1.11 percent to $952.60. In addition, palladium declined by 1.04 percent to $998.77.
