As traders digested the news of Trump's nomination of Scott Bessent as Treasury Secretary and watched the Federal Reserve's next interest rate decision, the price of gold fell again.

On November 25, the decline in international gold prices widened to 2%. As of press release, spot gold fell 1.22% to 2682.708 US dollars/ounce.

Earlier, Friday recorded its biggest weekly gain in 20 months due to the escalation of the Russia-Ukraine conflict, which enhanced the safe-haven appeal of gold.

Why did international gold prices suddenly dive?

Last weekend, US President-elect Trump appointed billionaire Scott Bessent (Scott Bessent) as Secretary of the Treasury.

Markets generally welcome Bezent as Treasury Secretary, believing that this is a prudent choice that will inject more stability into the US economy and financial markets. The hedge fund manager's nomination allays concerns about the new president's inflation agenda, which could reduce the appeal of gold as a hedge against rising prices.

Giovanni Staunovo, a commodity analyst at UBS Group, said that the news that Bezent became finance minister may be a reason for the fall in gold prices on Monday. Furthermore, profit recovery after the rise in gold prices last week may also cause gold prices to fall.

“Given his comments on the phased implementation of tariffs, some market participants felt that his negative attitude towards the trade war was less strong,” Staunovo said.

According to a report, US business activity is expanding at the fastest rate since April 2022, and investors are now focusing on the future of monetary policy.

According to CME's FedWatch tool, traders believe the probability that the Fed will cut interest rates by another 25 basis points in December is 51%, down from 62% last week.

Swap traders think it's unlikely that the Federal Reserve will cut interest rates next month. Higher borrowing costs tend to put pressure on gold.

This week's series of data may provide clues to the Federal Reserve's likely interest rate path. These include the minutes of the Federal Reserve's November meeting, consumer confidence and personal consumption spending data — the monetary authorities' preferred inflation indicator.

Driven by the central bank's purchase of gold and the Federal Reserve's interest rate cuts, the price of gold has risen by about 30% this year. Safe haven purchases are also a characteristic of the escalation of the Russian-Ukrainian war.

Most investment banks are still optimistic about the future of gold, and Goldman Sachs Group and UBS expect the price of gold to rise further in 2025.

A number of banks raised their risk levels

Against the backdrop of increased fluctuations in gold prices, banks have also adjusted the risk levels of gold investment products.

Recently, China Construction Bank announced that the risk level of “Easy Deposit” will be adjusted to “medium risk”. On November 25, the reporter learned from relevant sources that this adjustment is mainly due to the recent international situation affecting the rise and fall of gold, which has caused the price of gold to fluctuate greatly. Customers are advised to buy carefully according to their own risk tolerance.

Prior to China Construction Bank, during the year, many banks, including Ping An Bank and Shanghai Agricultural Commercial Bank, raised the risk level of gold investment products, and several other banks raised the “threshold” for purchasing gold investment products.

As for many banks to adjust the gold investment business threshold, industry experts believe that the purpose of this move is to alert investors to the risk of future fluctuations, help the market return to rationality, and avoid possible investment disputes.

Dong Ximiao, chief researcher at CMB Finance, said that many people often think that gold is an immutable value-preserving product, but the price of gold does not just rise or fall; investing in gold is also risky.

Meanwhile, industry insiders predict that banks will follow up and adjust the risk level of the gold investment business in the future.