Gold (XAU/USD) has dropped to a seven-week low near $2,600, pressured by a stronger US Dollar driven by optimism around President-elect Trump’s economic policies, which are expected to boost inflation and influence Federal Reserve policy. With Trump’s pledges of tariffs, tax cuts, and stricter immigration, markets are pricing in a slower pace of Fed rate cuts, reducing gold’s appeal as a non-yielding asset.
Impact of Competing Assets and Safe-Haven Demand
Gold faces competition from Bitcoin, which has surged to record highs on expectations of favorable crypto policies, and from US stocks, buoyed by anticipated tax cuts and deregulation. Meanwhile, Trump’s potential influence on geopolitical conflicts, like his claim to quickly settle the Ukraine-Russia war, may be softening safe-haven demand for gold, though tensions in the Middle East remain high.
Technical Analysis: Gold at Major Support
Gold tests a key trendline at $2,600, below its 50-day SMA of $2,648, indicating potential further downside. A break below this trendline could push gold to $2,538, near the 100-day SMA. However, the broader trend remains upward, signaling possible medium-term support, though current sentiment is bearish.
