Stand firm at $4,100! Oil price dives to ease concerns about inflation. Gold continues to rise after the election, but the shadow of interest rate hikes has not dissipated
The Zhitong Finance App learned that the price of gold closed higher on Monday, standing above 4,100 US dollars per ounce, as falling oil prices eased concerns about inflation and dragged down the dollar. At the same time, investors increasingly expect the Democratic controlled Congress to push for an end to the war in the Middle East.
According to data, spot gold rose nearly 2% when US stocks closed on Monday, while US gold futures for December delivery closed up 1% to $4114.50. Early trading in the Asian market on Tuesday. As of press release, spot gold had declined slightly to $4127.46.
On Monday, oil prices continued their biggest weekly decline since April 2020, and traders were weighing diplomatic efforts to end the US-Iran war with a new round of attacks in the region. Earlier, US President Trump downplayed the possibility of another attack on Iran, even though ships near the Strait of Hormuz were still being attacked sporadically.
Meanwhile, the US stock market rose due to buying intervention after technology stocks were sold off last week. The dollar index fell, making dollar-denominated commodities cheaper for buyers using other currencies.
Since this year, the trend of oil and gold has mostly reversed, and high energy prices have intensified market expectations for tighter monetary policy — this is a headwind for gold, which is not yielding profits.
US Treasury yields and crude oil prices have declined in recent trading days, as the market is betting that the Democratic Party will push to end the Iranian conflict after taking control of Congress, and the government's support for expanding spending and borrowing will weaken.
Phil Flynn of Price Futures Group wrote that the “main driving force” for the rise in gold prices that day was oil. “Falling oil prices have reduced recent inflationary pressure, which is beneficial to gold, even if the long-term interest rate path remains limited,” he added. If gold can maintain recent lows, the path of least resistance may still be upward.
However, the US non-farm payroll data released last Friday was stronger than expected, triggering market concerns about further interest rate hikes by the Federal Reserve and putting pressure on demand for gold, an interest-free asset. Traders will be watching the monthly consumer price index data released on Tuesday and producer price data released on Friday to find the next clue to the interest rate path.
Chicago Federal Reserve Chairman Austan Goolsbee (Austan Goolsbee) said that policymakers need to deal with economic overheating and growing inflationary pressure that may be brought about by artificial intelligence (AI) construction.
“We must face up to the fact that in terms of the policy goal of inflation, our cost-side and inflation-side controls have yet to meet standards,” Goulsby said at an event in Chicago on Monday.
Mitsubishi UFJ analyst Soojin Kim said in a report: “Although the US employment report released last weekend showed that the November data far exceeded expectations, gold continued to rise. The fall in energy prices last week helped calm the market's inflationary anxiety, and also meant that the pace of interest rate hikes by central banks around the world may slow down.”
According to the CME Federal Reserve Watch (FedWatch), traders are currently betting that the probability that the Federal Reserve will raise interest rates in December is still as high as 84%.
Also, according to data released last Saturday, the People's Bank of China increased its gold reserves in October, continuing the buying trend for two years. According to the World Gold Council report, the cumulative net purchase volume of the official sector in the third quarter was 321 tons, the highest level since the end of 2024. Gold reserves increased by 25.8 tons in October, the largest monthly purchase volume in three years.