3rd December 2024 Gold prices retreated on Monday, primarily due to the strengthening of the U.S. dollar. This shift gained momentum following Donald Trump’s stern warning to BRICS nations. Trump threatened 100% tariffs on any attempts to create or support an alternative currency to the dollar, echoing similar threats made to Canada and Mexico last week. These warnings have affected market sentiment, alongside expectations that Trump’s proposed tariff plans and expansionary policies could lead to increased inflation, potentially influencing the Federal Reserve’s future interest rate decisions.
All eyes are now on upcoming U.S. economic data for clues on the Federal Reserve’s monetary policy outlook. Key releases include job openings, private wage growth, activity in the services and manufacturing sectors, and the unemployment rate. Market attention is also shifting to scheduled speeches from several Federal Reserve officials, including Chair Jerome Powell, which may provide further clarity on the central bank’s stance.
The appeal of gold as a safe-haven asset has moderated somewhat following the U.S.-brokered ceasefire between Israel and Hezbollah. However, ongoing geopolitical tensions, particularly in the Russia-Ukraine conflict, continue to support demand for gold, limiting substantial downside risk in the near term.
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