GOLD: Navigating the Effects of Inflation and Treasury Yields
Updated
Gold prices have declined for the second consecutive day, influenced by a variety of factors. The ongoing optimism surrounding Donald Trump's trade policies continues to bolster the US Dollar (USD), which is exerting downward pressure on the precious metal. The price of gold (XAU/USD) is building on the significant losses incurred last week and remains under selling pressure as trading commences on Monday, influenced by the prevailing bullish sentiment towards the USD.
The promise of expansive economic policies from President-elect Trump has kept the USD near a four-month high reached last week, which is a significant factor dampening demand for gold. Additionally, Trump's proposed 10% tariff on all US imports is anticipated to ignite inflationary pressures, limiting the Federal Reserve's (Fed) ability to implement aggressive rate cuts. This environment is supportive of rising US Treasury bond yields, further incentivizing investors to move away from the non-yielding gold.
From a technical standpoint, we are eyeing potential scalp opportunities near the first demand zone around 2,600. The latest Commitment of Traders (COT) report indicates that retail investors are taking long positions, whereas institutional investors—often referred to as "smart money"—are positioned inversely. The strengthening dollar and our analysis point to a likely bearish trend ahead. Additionally, we have previously opened a short position in Silver (details available on our TradingView profile) as we anticipated this type of scenario unfolding for precious metals.
In summary, the combination of robust USD performance and inflationary expectations looks set to keep gold under pressure in the near term.
✅ Please share your thoughts about XAU/USD in the comments section below and HIT LIKE if you appreciate my analysis. Don't forget to FOLLOW ME; you will help us a lot with this small contribution.
The promise of expansive economic policies from President-elect Trump has kept the USD near a four-month high reached last week, which is a significant factor dampening demand for gold. Additionally, Trump's proposed 10% tariff on all US imports is anticipated to ignite inflationary pressures, limiting the Federal Reserve's (Fed) ability to implement aggressive rate cuts. This environment is supportive of rising US Treasury bond yields, further incentivizing investors to move away from the non-yielding gold.
From a technical standpoint, we are eyeing potential scalp opportunities near the first demand zone around 2,600. The latest Commitment of Traders (COT) report indicates that retail investors are taking long positions, whereas institutional investors—often referred to as "smart money"—are positioned inversely. The strengthening dollar and our analysis point to a likely bearish trend ahead. Additionally, we have previously opened a short position in Silver (details available on our TradingView profile) as we anticipated this type of scenario unfolding for precious metals.
In summary, the combination of robust USD performance and inflationary expectations looks set to keep gold under pressure in the near term.
✅ Please share your thoughts about XAU/USD in the comments section below and HIT LIKE if you appreciate my analysis. Don't forget to FOLLOW ME; you will help us a lot with this small contribution.
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