The price of gold will continue to fall ?


Aime
The price of gold is likely to face downward pressure in the short term. Here's an analysis to support this view:
- Trump's Victory Impact on Fiscal Policy: The market has reacted positively to Donald Trump's victory, with expectations of policies that could benefit economic growth, such as tax cuts, investment in domestic energy production, and deregulation1. This optimism could lead to a stronger dollar and potentially lower demand for gold as a safe-haven asset.
- Federal Reserve's Rate Cut: The Fed's decision to cut interest rates is likely to have a short-term negative impact on gold prices. Lower rates often lead to a stronger dollar, which can make gold more expensive for foreign buyers and reduce demand23. Additionally, the Fed's statement suggests that they are cautiously optimistic about the economic outlook, which could reduce the need for further rate cuts and thus lessen gold's appeal as a hedge against economic uncertainty4.
- Market Expectations and Technical Analysis: The CME FedWatch tool indicates a 99% probability of a 25-basis-point rate cut in December, suggesting that the market has already priced in the expectation of a rate cut1. This could mean that any positive reaction to the rate cut might be short-lived if it does not meet the market's expectations for further easing.
- Trump's Influence on Monetary Policy: Trump has expressed intentions to influence Federal Reserve policy, which could lead to a less dovish stance if he is successful in his efforts5. This could include slowing or halting the rate-cutting cycle, which might further reduce the demand for gold.
- Economic Data and Market Sentiment: The University of Michigan Consumer Sentiment report for November and other economic indicators will be crucial in determining the direction of interest rates and, consequently, gold prices36. If the economic data remains strong, it could lead to a more robust dollar and potentially lower gold prices.
- Historical Context: Historically, gold prices have been influenced by geopolitical factors and economic uncertainties. However, in the current scenario, the impact of these factors might be mitigated by the market's reaction to Trump's policies and the Fed's response7.
In conclusion, while gold has some potential upside due to its safe-haven status and the uncertainty surrounding the Trump administration's policies, the current market conditions and expectations suggest that the price of gold is more likely to face downward pressure in the short term. Investors should monitor the Fed's future policy decisions, economic data, and any changes in market sentiment that could influence gold prices.
Source:
more
less
Continue this conversation 

Explore
Screener
Analysis
Learn
Wiki