Market Analysis by Quasar Elizundia,Expert Research Strategist at Pepperstone
December 03, 2024 –
“The price of gold is once again facing bearish pressures at the start of December, with XAU/USD dropping nearly 0.5% and trading around $2,630 per ounce. This movement occurs in a context marked by the strength of the U.S. dollar, driven by recent statements from President-elect Donald Trump.
Trump has threatened to impose 100% tariffs on BRICS nations if they persist in their efforts to de-dollarize their economies and reduce reliance on the dollar as a global reserve currency. These warnings have strengthened the dollar, as this could potentially boost demand for the greenback if the BRICS nations choose to avoid trade retaliation. Since gold is priced in dollars, the appreciation of the U.S. currency is negatively impacting the price of the yellow metal.
From a thematic perspective, Trump’s policies aim to preserve the dollar’s hegemony in international trade. While the proposed tariffs could complicate U.S. trade relations, they could also consolidate global demand for the dollar, reinforcing its position as the dominant currency. This scenario could create an unfavorable environment for gold, as the strength of the dollar tends to weigh on the price of the yellow metal.
It is important to note that gold faces a complex scenario, and the outlook for XAU should remain flexible, closely monitoring factors such as geopolitical volatility and global trade tensions. While the current focus seems to favor the dollar, which affects gold prices, this dynamic has the potential to quickly shift from impacting the yellow metal to supporting it, especially if any signs of escalating conflicts arise.
In conclusion, gold begins December under pressure due to the strong dollar and the protectionist tone of U.S. trade policies. However, the underlying risks in the global landscape could provide support for the metal’s price in the medium term.”