Gold (XAU/USD) continues its slide, now trading in the $2,620s, over $50 below last week’s close. A stronger US Dollar (USD) is the main factor, with the Dollar Index (DXY) up nearly 0.5%. Optimism surrounding President-elect Donald Trump’s economic policies, expected to support the USD, is driving the shift. Since Gold is priced in USD, a stronger Dollar pushes its value down.
Expectations of tariffs and inflation from Trump’s policies might also slow Federal Reserve rate cuts, potentially attracting foreign capital and further supporting the USD. Trump’s approach to tax cuts could add inflationary pressure as well.
Gold Pressured by Trade Rumors
Gold is further impacted by rumors that Trump may appoint Robert Lighthizer, a known protectionist, as US Trade Representative, signaling a tough stance on China. Although the rumor is unconfirmed, it heightens market caution.
With a Republican Congress likely, Trump appears set to pass his economic agenda, including tax cuts, boosting USD. The rise of Bitcoin (BTC) to new highs, likely driven by expected relaxed crypto regulations, adds to competition for Gold, as does the potential for lower corporate taxes making stocks attractive. Trump’s pledge to end the Ukraine-Russia war also reduces safe-haven flows to Gold.
Technical Analysis: XAU/USD Maintains Downtrend
Gold’s downtrend is resuming, with a break below $2,643, signaling further declines to the $2,605 level. The Relative Strength Index (RSI) suggests Gold is not oversold, so more downside potential exists, although a long-term uptrend remains intact.