The market expects the US monetary policy to tighten further, causing the price of gold to decline for the fifth consecutive trading day.

On Thursday, the price of gold continued to decline for the fifth consecutive trading day, as the market expected tighter future monetary policies and the geopolitical risks that may decrease after Trump's presidency could weaken, causing the gold price to drop to its lowest level in two months. This is the longest consecutive decline record for gold since mid-February, and two weeks ago the gold price was at historical highs. City Index and FOREX.com market analyst Fawad Razaqzada stated that the weakness in gold is mainly influenced by two factors. One is the market's expectation that under Trump's presidency, US monetary policy may remain relatively tight in 2025. The 10-year Treasury yield is close to 4.5%, which means that the opportunity cost of holding assets with no or low yields is rising, putting pressure on gold. The hawkish pricing of the US interest rates also strengthens the US dollar, further depressing the gold price priced in dollars. The second factor is the reduced expectations of geopolitical risks by investors. Razaqzada stated that with Trump winning the election smoothly, the market is expecting a easing of tensions in the Middle East and between Russia and Ukraine after he takes office. According to Dow Jones market data, on October 30, the settlement price of gold futures (most active contract) reached a historical high of $2800.80 per ounce. However, on Thursday, the settlement price for December contracts was $2572.90, a decrease of $13.60 or 0.5% from the previous day, hitting the lowest level since September 11, with a cumulative decline of 8.1% from the historical high in just two weeks. Naeem Aslam, Chief Investment Officer at Zaye Capital Markets, believes that gold is currently undergoing the necessary adjustment. Recent US inflation data suggest that measures are still needed to control inflation, leading traders to believe that the Fed's rate cut path will be slower, "which directly affects the price of gold." Aslam predicts that gold prices may fall to around $2500 per ounce, the lowest since mid-August. Samer Hasn, Senior Market Analyst at XS.com, pointed out that the flow of data from US inflation and labor market indicates a reduced likelihood of a rate cut next year. US Labor Department data shows that initial jobless claims decreased by 4,000 to 217,000 in the week ending November 9, the lowest since May. Meanwhile, the annual wholesale price rate rose to 2.4% as of October, the highest in four months. Despite these data not significantly changing the expectations of the Fed, hopes for a rate cut in early January have diminished, which may be one of the reasons for the continued decline in gold prices. CME's Fed Watch Tool shows that the Fed is expected to cut rates by 25 basis points on December 18, with the likelihood of a rate cut on January 29 falling to less than 26%, a significant decrease from over 60% a month ago. Meanwhile, Michael Armbruster, Co-Founder and Managing Partner at Altavest, stated that the Trump administration plans to establish a new agency called the Department of Government Efficiency (DOGE) to cut government spending and the federal deficit, which has led to a surge in the dollar index and pressure on gold prices. Armbruster pointed out that Trump has surrounded himself with a group of deficit hawks advocating for a free market, including appointing Musk and Vivek Ramaswamy as heads of DOGE. He noted that cutting federal spending is a positive step towards addressing the $1.8 trillion deficit. In this context, the key support level for gold prices around $2500 is important, according to Armbruster, which is where gold bulls need to stand firm. However, he added that the demand for gold from foreign central banks remains the most important support factor for gold prices. Juan Carlos Artigas of the World Gold Council told foreign media at the end of October that despite central banks purchasing a total of 694 tons of gold so far this year, slightly lower than the record in 2023, central banks' demand is still strong. Overall, Armbruster remains bullish on gold, but if the DOGE team successfully reduces federal government spending, the prospects for gold to rise will diminish.