Gold Dips on Key Events

At the time of writing, the price of gold has seen a dip of 3.36% against the U.S. dollar, marking its largest daily decline since June 7 this year. This pullback comes after last week’s significant rally of over 6% and the recent news of two key macroeconomic events helping to reduce market uncertainties.

Probable de-escalation between Israel and Hezbollah

U.S. President Joe Biden and French President Emmanuel Macron are expected to announce a ceasefire in Lebanon between the armed group Hezbollah and Israel in the next day, according to several senior Lebanese sources. Although Benjamin Netanyahu's office has declined to comment on the reports of an agreed ceasefire between Israel and Lebanon, senior Israeli officials have told reporters that this Tuesday's cabinet meeting was intended to approve the text.

Despite diplomatic progress, hostilities have intensified in recent days. Over the weekend, Israel carried out powerful airstrikes, one of which killed at least 29 people in central Beirut, while Hezbollah unleashed one of its biggest rocket barrages yet on Sunday, firing 250 missiles into Israel.

Scott Bessent nominated to be U.S. Treasury Secretary

Billionaire hedge fund manager Bessent has won Trump’s nomination for U.S. Treasury Secretary, which has provided a calming and confidence-boosting tonic to equities markets. Analysts expect Bessent will be able to soften Trump’s more extreme economic views, including taking some heat out of his trade tariff agenda. Wall Street has welcomed his nomination to the highly influential role of overseeing tax policy, public debt, and international finance. He is viewed as a “safe hands” candidate who will provide a valuable moderating force to Trump. This potential appointment has helped to reduce the economic uncertainty in the United States, however, we will need to see exactly how things play out if and when he begins his role.

Ahead this week

Traders are gearing up for an important week, with minutes from the Federal Reserve's November meeting, U.S. GDP revisions, and core PCE data expected to provide insights into the central bank’s policy outlook. Many still anticipate a 25bps rate cut in December, but recent Fed speakers have taken on a more cautious tone heading into 2025.