Gold Prices Drop to Near Two-Month Low, Vulnerable Near $2,560 Area
Gold (XAU/USD) prices attracted sellers for the fifth straight day and dropped to the lowest level since September 19, around $2,559-$2,558 area during the Asian session on Thursday. The US Dollar (USD) extended its post-election rally and climbed to fresh year-to-date (YTD) tops amid hopes that US President-elect Donald Trump’s policies will spur growth. This, in turn, was seen as a key factor that continued to weigh on the USD-denominated commodity.
Meanwhile, investors believe that protectionist tariffs expected from the new Trump administration could raise inflation and force the Federal Reserve (Fed) to pause its easing cycle. Moreover, US data released on Wednesday showed slower progress towards lowering inflation and could result in fewer interest rate cuts next year. This remained supportive of the rising US Treasury bond yields and also contributed to driving flows away from the non-yielding Gold.
Moreover, positive sentiment in global equity markets exerted additional pressure on the safe-haven precious metal and supported prospects of further declines. Traders now await the release of the US Producer Price Index (PPI) for near-term opportunities. However, the focus will remain on Fed Chair Jerome Powell’s speech, which could provide cues on the future rate cut path and provide fresh impetus to Gold prices.
Source: FXStreet
