On Tuesday (November 26), in the early Asian market, spot gold continued the sharp decline from the previous trading day, at one point hitting a one-week low of $2605.34 per ounce. On Monday, gold prices plummeted by 3.3% in a single day, the largest one-day drop since June 7, ending a five-day streak of gains, mainly due to eased geopolitical tensions and a sudden decrease in market demand for safe-haven assets.
It has been reported that Israel and Hezbollah in Lebanon are close to reaching a ceasefire agreement, significantly lowering market concerns over an escalation in the Middle East situation. An Israeli senior official revealed that Prime Minister Netanyahu has accepted the ceasefire agreement and plans to formally approve the text at a cabinet meeting. Meanwhile, U.S. President Biden and French President Macron are expected to jointly announce a 60-day ceasefire agreement within 36 hours.
Despite significant breakthroughs in ceasefire talks, the situation is not entirely stable. In the final stages of finalizing the ceasefire agreement, Israel launched a massive airstrike on southern suburbs of Beirut controlled by Hezbollah. The Israeli government has refused to publicly comment on the details of the negotiations.
On the other hand, changes in U.S. politics also impacted market sentiment. Trump's nomination of Besent as U.S. Treasury Secretary is interpreted as a reversal of the "Trump trade," further weakening gold's safe-haven appeal. Analysts pointed out that after the recent rapid rise in gold, buying interest has shown signs of fatigue. With the Federal Reserve meeting minutes, GDP data, and core PCE price index due this week, bulls chose to take profits, putting clear pressure on gold prices.
While the global market focuses on the Middle East situation, attention is also turning to diplomatic efforts in Washington and Paris. White House National Security spokesman Kirby stated at a news conference, "The ceasefire agreement is nearing completion, but cautiousness is needed until everything is formally signed." The French presidency claimed significant progress has been made on the agreement text.
Currently, expectations for a ceasefire agreement have significantly increased among all parties, but with market sentiment fluctuations, the subsequent trend of gold prices still needs to pay attention to economic data and further changes in market risk aversion.
