On Monday, Gold prices fell by over 2% nearly as profit-taking pushed prices to a nearly 3-week high as prices rallied for 5 consecutive sessions. Gold slumped 1.8% to $2664.53 an ounce at 0619 GMT, retreating further from earlier lows of over 2%. U.S. gold futures fell by 1.7% to end at $2,666.40.
The price drop came after the spot posted its best weekly performance in nearly two years. Experts speculate that investors are now selling the recent rally, which they attributed to higher safe-haven demand due to global unrest and Fed rate cut expectations.
An additional imposition on gold prices was the announcement of fund manager Scott Bessent as the next U.S. Treasury Secretary. Some market participants interpret Bessent's appointment as less tension between different markets, especially between the US and China. This view has lowered the safe-haven buying of gold, which usually increases during economic and political instability.
President-elect Donald Trump had previously floated the possibility of imposing significant tariffs on Chinese goods and imports. However, Bessent's market expertise is a mitigating factor that could lead to more measured policies. Market strategist Yeap Jun Rong commented that Bessent's selection hints at a possible de-escalation in trade-related uncertainties, contributing to the pullback in gold prices.
Investors closely monitor several upcoming economic reports, and Federal Reserve signals for further direction on gold prices. This week, the Federal Reserve's November meeting minutes, GDP data (first revision), and core PCE inflation figures are all expected.
According to the CME FedWatch Tool, the anticipated cut of 25 basis points at the Fed meeting in December has slightly lowered, with the traders giving it a 56% probability compared to last week's 62%. The outlook for smaller cuts in monetary relief has also weighed on gold, as higher interest rates reduce the appeal of non-yielding assets like bullion.
Similarly, there was a decrease in the prices of other precious metals, as this chart shows: The price of spot silver declined by 2.2% to $30.63 per ounce. The price of platinum fell by 1.2% to $952.00 per ounce, while that of palladium declined by 1% to $998.88 per ounce.