Gold Prices Drop As Investor Demand for Risk Aversion Declines

 

Gold prices slump on Monday, November 25 in Asian trade, driven by reduced safe-haven demand following reports of potential ceasefire negotiations between Israel and Hezbollah. Spot gold falls 1.72%; December gold futures drop 1.63%. Despite the decline, the precious metal maintained strong gains from the previous week supported by heightened geopolitical tensions between Russia and Ukraine.

 

Reports suggest Israel is nearing a 60-day ceasefire deal with Hezbollah, marking a possible de-escalation in the Middle East. The potential de-escalation lowers the demand for gold as a safe haven. However, the ongoing war between Israel and Palestine and the intensification of the conflict between Russia and Ukraine leave a possibility for gold to rally higher.

 

Specifically, geopolitical tensions escalated due to Russia and Ukraine firing long-range missiles at each other last week, favoring the buying of precious metals like gold as a safe-haven asset. The global uncertainty after the U.S. Election might drive gold and silver up.

 

Looking at Multi Commodity Exchange of India Limited (MCX), support for gold is at Rs 77,330-77,040 with resistance at Rs 77,880-78,220. Support for silver is at Rs 90,150-89,500 with resistance at Rs 91,400-92,200. Manoj Kumar Jain advised investors to buy gold at a low near Rs 77,300 with a stop loss of Rs 77,040 and a target of Rs 78,000 and sliver on lows around Rs 90,300 with a stop loss of Rs 89,650 and a target of Rs 91,800.

 

Gold prices were further influenced by movements in the dollar and Treasury yields. The dollar index retreated from a 13-month high today after U.S. President-elect Donald Trump nominated Scott Bessent as Treasury Secretary. Bessent, seen as a moderate choice, calmed market uncertainties, leading to lower Treasury yields and a weaker dollar. They helped limit losses in gold and other metals.

 

Other precious metals also slipped. In contrast, industrial metals copper gained with Benchmark copper futures rising 0.96%. The copper market is expecting its major importer China's upcoming economic data this week.

 

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