Gold and silver are witnessing a significant decline and approaching their daily lows during midday trading in the United States this Monday. This decline comes as a result of improved investor risk appetite, significant profit-taking pressure and weak liquidation of long positions by traders in short-term futures contracts. December gold contracts fell $85.50 to $2,626.80, while December silver contracts fell $0.948 to $30.39.
The US market is showing greater optimism at the start of the week before the Thanksgiving holiday, which negatively affects safe-haven metals. There are reports indicating that a ceasefire agreement between Israel and Hamas is near, which enhances risk appetite. In addition, President-elect Trump’s selection of hedge fund investment manager, Scott Bessent, as Secretary of the Treasury contributes to the positivity, as followers believe that the US financial system will be in safe hands under Bessent’s leadership. Besant faces challenges ahead, as noted in a Wall Street Journal article titled: “Markets Highlight Deficit,” which explains part of the rise in U.S. Treasury yields in recent weeks.
US stock indices are volatile at midday but remain close to recent record levels. Financial markets offer a competitive alternative to metals as a safe haven.
Today, the US Dollar Index is declining as a result of a correction after reaching its highest levels in two years on Friday. Crude oil prices on the Nymex exchange are also declining, as they are trading at around $69.25 per barrel. Meanwhile, the yield on 10-year US Treasury bonds is about 4.2%.
This decline may be attributed to the news circulating about a preliminary agreement between Hezbollah and Israel to stop the war in southern Lebanon.
Gold prices were poised for a sell-off due to buying exhaustion after last week’s rise. Daniel Ghaly, commodities strategist at TD Securities, said the appointment of Scott Besent as Treasury Secretary removed part of the risk premium associated with the United States.
“Furthermore, reports that Israel and Lebanon have agreed to terms to end the conflict between Israel and Hezbollah have pushed gold prices lower further.”
UBS analyst Giovanni Staunovo said some market participants see Becent as less negative about the trade war.
