To The Moon

The decline in gold prices overnight was indeed a bit sharp:

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Yesterday, the big K line of gold fell by 3.36%, equivalent to 91.15 US dollars, and the amplitude ranged from the highest 2721 to 2615. Both the amplitude and the decline have exceeded 1106, which is the big K line after the results of the US presidential election in November. There It fell 3.10% to 85.05 US dollars.

The short-term decline of gold is mainly related to the following reasons:

First, it is related to the cooling of geopolitical tensions.Last week, Russia and Ukraine launched missiles at each other, which triggered a rise in risk aversion. However, the situation in the region did not escalate further over the weekend. In addition, the market has reported this week that Israel may reach a ceasefire agreement with Hezbollah in Lebanon, which has made the geopolitical situation in the Middle East. The cooling of political tensions has led to a reduction in safe-haven demand, which is one of the main reasons for the plunge in gold prices.

Second, changes in expectations for the Fed to cut interest rates.With the recent announcement of U.S. economic indicators and the comments of comprehensive Fed officials, the overall speed and magnitude of the Fed's interest rate cuts in 2025 are declining. The market even now believes that the Fed will suspend interest rate cuts in January 2025, which is negative for gold.

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Third, the US Dollar Index continues to rise.Trump's plan to impose tariffs will eventually bring the result of "strong dollar" through trade and monetary policy. On the one hand, higher tariffs will cause U.S. trading partners to lower their exchange rates (promoting the appreciation of the U.S. dollar in disguise) to increase the competitiveness of their export products; On the other hand, tariff revenue may be used to support U.S. fiscal expansion, which will also support the U.S. dollar. The continued rise of the US dollar will suppress assets such as gold.

Fourth, the nomination of the US Treasury Secretary came to fruition.US President-elect Trump nominated billionaire Scott Bescent as the post of Treasury Secretary. Bescent advocated the "3-3-3" policy, that is, reducing the budget deficit to 3% of GDP by 2028, achieving 3% GDP growth through deregulation, and increasing production of 3 million barrels of oil or equivalent energy per day. If these goals can be achieved, it will ensure the smooth operation of the U.S. bond market as a whole, which will be negative for gold prices.

Finally, the exit of profit-taking closure.Some investors chose to take profits at high levels due to the previous rise in gold prices, which also put pressure on gold prices.

There is Thanksgiving in the United States this week, so the volatility naturally converged in the second half of the week. These fundamental information overnight can be understood by everyone as the bulls and shorts on Wall Street, using this information to make waves, amplify the volatility of the entire market, and then kill all short-term bulls and shorts.

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