Gold dropped more than 3% on Tuesday, reaching an intraday low close to $2,605, as pressure increased from higher Treasury rates and a stronger US currency. The decline occurred as Scott Bessent was nominated as the U.S. Treasury Secretary, which increased confidence across the globe and sparked demand in riskier assets.
Bets on reducing tensions in the Middle East, with certain reports indicating that a truce was approaching, reduced the safe haven’s demand. Gold’s gains earlier this year occurred when tensions in the Middle East reached a high point.
When Trump takes office on January 20, he promised to impose a 25% tax on all commodities from Canada and Mexico and an extra 10% on items from China. The Chinese ambassador to Australia responded by cautioning that US trade policy with China and other nations will be affected. This factor could potentially boost the US Dollar and weigh on gold prices.
Traders and investors are now looking to the FOMC minutes for clues about the Fed’s future rate-cut plans. These insights could influence US Dollar demand and provide clearer direction for gold, especially with the upcoming GDP data and Core PCE index set to be released on Wednesday, likely sparking volatility in gold.
Technical Analysis
Source: TradingView
Gold prices fell below the pivot line at $2,667, after rebounding from a low of $2,545. Currently trading below the 100 EMA, bearish momentum continues to weigh on the metal.
Support has formed around $2,615, and gold seems to be attempting a pullback. If it fails to regain strength, prices could break below support, confirming that the broader downtrend remains in place. A further decline may see prices revisit the November 14 low.
Conversely, if gold recovers, it would need to break above the pivot line and surpass the previous high of $2,718 to signal the possibility of a new upward trend.
