What’s Pressuring Gold Prices Today?
Gold prices retreated by 2% on Monday, with XAU/USD hovering near the upper end of a short-term retracement zone between $2663.51 and $2693.40. This pullback follows a five-session rally to a three-week high. The decline is attributed to profit-taking and tempered safe-haven demand after Scott Bessent’s nomination as U.S. Treasury Secretary. His appointment has eased market concerns about aggressive trade policies and economic instability.
The retreat is occurring just above the 50-day moving average at $2666.15, with the market’s near-term direction likely dependent on whether prices hold at the support cluster between $2666.16 and $2663.51. A break below this zone could trigger accelerated selling toward $2629.13.
What Are the Fundamental Drivers Behind the Decline?
Profit-taking has been the dominant factor, as investors locked in gains from last week’s rally, which delivered the strongest weekly performance in nearly two years. Gold traditionally acts as a safe haven during political or economic uncertainty, but Bessent’s nomination has tempered fears of a potential trade war. As a fiscal conservative, Bessent’s appointment signals stability, potentially reducing inflationary risks from tariffs.
Market focus is also shifting to key economic data due this week, including the Federal Reserve’s November FOMC meeting minutes, core PCE data, and GDP revisions. Traders are assessing the likelihood of another rate cut, with a 56% probability of a 25-basis-point reduction in December, per CME FedWatch data.
How Is Broader Market Activity Influencing Gold?
The dollar softened on Monday after an extended rally, driven by lower Treasury yields. Yields on the 10-year note slipped to 4.343% from Friday’s 4.412%. Bessent’s nomination reassured bond markets, leading to a pullback in yields and marginally weakening the greenback.
Equities strengthened on optimism about pro-business policies, further reducing gold’s appeal as a haven. However, upcoming inflation data could reignite concerns, supporting a potential rebound in bullion.
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While the retracement could offer a buying opportunity near $2663.51, failure to hold this level would signal further downside toward $2629.13.
On the upside, overcoming $2693.40 will be the first sign of strength. A sustained move above $2721.42 would indicate stronger buying momentum, with $2790.17 emerging as the next target.
For now, the outlook is mixed, leaning bearish in the short term unless gold breaks decisively above $2693.40, which could shift sentiment back to the upside.
For a look at all of today’s economic events, check out our economic calendar.
