Gold falls by $2.57 as USD strengthened

November 28, 2024 (MLN): Gold prices experienced a significant decrease of -$2.57 to $2,633.51 per ounce [11:16 am] from the prior day's close of $2,636.09 per ounce, resulting in a 0.10% decline, as the U.S. dollar strengthened.

At the same time, investors assessed a flurry of economic data showing stalled inflation progress, suggesting the Federal Reserve might tread cautiously on further interest rate cuts, Kitco added.

The dollar index (.DXY), opening a new tab was up 0.1%, reducing gold's appeal for holders of other currencies.

Personal Consumption Expenditures (PCE) and core PCE prices both showed that inflation progress had stalled, reinforcing the Federal Reserve's cautious stance on further rate cuts.

Meanwhile, the Fed's struggle to bring inflation back to its 2% target and the possibility of higher tariffs under the upcoming Trump administration may constrain the U.S. central bank's ability to implement rate cuts next year.

Markets now see a 64.7% chance of a quarter-point rate cut in December, as per the CME group's FedWatch tool, which opens a new tab.

Elsewhere, Mexican President Claudia Sheinbaum warned of retaliation if Trump enforces a 25% tariff, citing potential U.S. job losses and higher consumer prices.

Gold is regarded as a safe-haven investment during periods of economic or geopolitical instability, including trade wars.

Trading is expected to be thin with U.S. markets closing on Thursday for thanksgiving holiday.

In the short term, particularly over the next few days to two weeks, gold could come under further pressure. However, the longer-term bullish trend for gold remains intact, Wong added.

SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, said its holdings fell 0.10% to 878.55 metric tons on Wednesday.

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