On Tuesday (November 12), the price of gold continued to decline. At one point, spot gold hit a low of nearly one month to $2604.05 per ounce. Investors continued to pour into transactions that were thought to benefit from the Trump administration's rise. The dollar continued to rise and slightly hit a seven-month high of 105.71, putting pressure on the price of gold.

Kyle Rodda, senior financial market analyst at Capital, said, “Expectations that the US economy will perform well and the prospect that the Trump administration may adopt aggressive trade measures continue to push up the dollar. The market is lowering expectations for the Fed to cut interest rates in the future, and the prospects for the December meeting to cut interest rates have been questioned.”

Decision Desk HQ predicted on Monday that Trump's Republican Party will control both houses of Congress after taking office in January. This will enable him to push the agenda of cutting taxes and shrinking the federal government.

Since Trump won the US presidential election, the price of gold has been under pressure. Trump's victory raised the possibility that inflation would rise, as well as the need to keep interest rates high for a longer period of time.

According to CME's FedWatch tool, based on possible tariffs and immigration policies, the market believes that the possibility that the Fed will cut interest rates by 25 basis points on December 18 has dropped to about 65% from nearly 80% a week ago.

Kristina Clifton, senior foreign exchange strategist at Commonwealth Bank of Australia (CBA), said, “We believe the dollar has more room to rise. Fast money has transferred funds, but long-term investors will need time to reconfigure their portfolios”.

The continued strengthening of the US dollar reduced the attractiveness of gold. According to the latest data, SPDR Gold Trust, the world's largest gold ETF, dropped 4.88 tons to 871.97 tons on Monday, a new low since September 27.

Market attention will be focused on the US Consumer Price Index (CPI) data for October released on Wednesday, the producer price index (PPI) released on Thursday and the number of jobless claims at the beginning of the week, and retail sales and industrial production announced on Friday. Many Federal Reserve members, including Federal Reserve Chairman Powell, will also deliver speeches this week.

After the price of gold fell below the lower Bollinger line and the 55-day EMA overnight, short-term bearish signals strengthened, and most market participants believed that the price of gold faced a risk of further correction. More medium- and long-term bulls continued to close their positions, and some short-term bears entered the market, causing the price of gold to fall to around the 2,600 mark.

The fundamentals are temporarily biased towards the bears, and the technical side is also temporarily biased towards the bears. The gold price is at risk of further decline in the future.

It is important to note that the high of September 18 was 2599.96 dollars, the October 10 low was 2602.54 dollars, and the 38.2% retracement level of 2286-2790 was at $2598.01. The support around 2598 is relatively strong. Before falling below this position, there may be some short-term dips to support the price of gold, and it is even necessary to guard against a “comeback” of bulls. KDJ also gave an initial signal of short-term overselling. We need to beware of the possibility of short-term fluctuation and rebound adjustments in gold prices. The above watch for resistance around the intraday high of 2627 and the 55-day EMA at 2634.96.

Also, the market may have some wait-and-see sentiment before Wednesday's US CPI data.

However, if the price of gold falls below strong support around 2598, the price of gold is expected to fall further to around the 100-day EMA of 2537.94.

(Daily chart of spot gold, source: Easy Huitong)

There is little economic data for this trading day. Focus on the speeches of several Federal Reserve officials and news related to Trump's future cabinet candidates. Federal Reserve Governor Waller, Richmond Federal Reserve Chairman Barkin, Minneapolis Federal Reserve Chairman Kashkari, and Philadelphia Federal Reserve Chairman Hackburn will deliver speeches one after another on the trading day. Investors need to focus their attention.

At 14:36 Beijing time, spot gold is currently reported at US$2608.41 per ounce.