Gold loses over 2% after Scott Bessent's nomination to US treasury post
Gold prices lost over 2% in European trade on track for the first loss in six days, trading once again below $2700 and giving up the 3-week high on profit-taking.
It comes as market sentiment improved following US President-elect Donald Trump’s nomination of Scott Bessent for the US treasury secretary post, which would lead to a more balanced approach to tariffs and other financial policies.
Prices
Gold prices fell 2.1% today to $2658 an ounce, with November 6 highs at $2721.
On Friday, gold rose 1.7%, the fifth profit in a row after the release of global indicators that showed economic weakness worldwide, which would likely prompt central banks to carry on policy easing.
Gold also rose 6% last week, the first weekly profit in a month, and the largest since March 2023.
Scott Bessent
US media reported the nomination of Scott Bessent, an investor and one of the proponents of imposing political supervision over the Federal Reserve, to the post of US treasury secretary.
Trump said in a statement that Bessent will help him usher in a new golden age for the US, and bolster its status as the world’s biggest economy, and a center for creativity and entrepreneurship.
US Rates
Following the nomination, the odds of a 0.25% Federal Reserve interest rate cut in December rose from 52% to 56%.
Now investors await the Federal Reserve’s last meeting minutes, in addition to US GDP growth data this week to gather more clues.
The SPDR
Gold holdings at the SPDR Gold Trust remained unchanged on Friday at a total of 877.97 tons, the highest since November 7.
Euro tries to recover from two-year trough amid negative pressures
Euro rose in European trade on Monday against a basket of major rivals, on track for the first profit in five days against the dollar and moving away from two-year lows, as market sentiment improved after Trump’s Scott Bessent appointment for the US treasury secretary post.
However, the euro faces mounting pressures, including a slowdown in eurozone economic indicators, which boosted the odds of an ECB interest rate cut in December.
The Price
The EUR/USD pair rose 0.85% today to $1.0502, with a session-low at $1.0449.
The euro closed down 0.6% on Friday against the dollar, hitting a two-year nadir at %1.0331 following grim eurozone data.
The euro lost 1.2% against the dollar lost week, the third weekly loss in a row.
Scott Bessent
US media reported the nomination of Scott Bessent, an investor and one of the proponents of imposing political supervision over the Federal Reserve, to the post of US treasury secretary.
Trump said in a statement that Bessent will help him usher in a new golden age for the US, and bolster its status as the world’s biggest economy, and a center for creativity and entrepreneurship.
European Rates
Following rather weak eurozone industrial data for the fourth quarter of 2024, the odds of a 0.25% interest rate cut by the European Central Bank in December rallied from 75% to 95%.
And the odds of a more aggressive 0.5% interest rate cut in December rose to 59%.
Now investors await more data and remarks by ECB officials to gather more clues in the next few weeks.
Yen rushes to one-week high after Scott Bessent's US nomination
The Japanese yen rallied on Monday to a week high against the US dollar amid increasing odds of a Japanese interest rate hike in December, while markets welcomed US President-elect Donald Trump’s nomination of Scott Bessent to the post of US treasury secretary.
Bessent is an old Wall Street insider, and his nomination pushed US 10-year treasury yields down and reduced the yield gap between Japan and the US, in turn boosting the yen.
The Price
The USD/JPY pair fell 0.8% today to 153.54 yen per dollar, a week low, with a session-high at 154.39.
The yen lost over 0.1% against the dollar on Friday, the fourth loss in five days following strong US services data.
The yen also lost 0.3% last week against the dollar, the second weekly loss in a row amid concerns about a wider Japan-US treasury yield gap.
Ueda
Bank of Japan Governor Kazuo Ueda said the BOJ will check data before taking its interest rate decision next month, and will consider carefully the impact of yen’s movements on economic outlook and prices.
Ueda noted that inflation is rising sustainably, pushed by higher wages, and warned from keeping borrowing costs too low.
Japanese Rates
Following the data and remarks, the odds of a BOJ interest rate hike in December rose from 54% to 60%.
According to a Reuters Survey done last week, 56% of economists expect the BOJ to raise interest rates once more in December, while 90% of economists expect it to raise rates by 50% by the end of March 2025.
Scott Bessent
US media reported the nomination of Scott Bessent, an investor and one of the proponents of imposing political supervision over the Federal Reserve, to the post of US treasury secretary.
Trump said in a statement that Bessent will help him usher in a new golden age for the US, and bolster its status as the world’s biggest economy, and a center for creativity and entrepreneurship.
US Yields
US 10-year treasury yields rallied over 1.4% on Monday to a week high at 4.341%, pressuring the greenback.
The markets welcome Trump’s nomination of Scott Bessent and an old voice and insider on Wall Street.
Following the nomination, the odds of a 0.25% Federal Reserve interest rate cut in December rose from 52% to 56%.
Sterling declines after disappointing data
Sterling fell on Friday following rather disappointing UK data for November.
The UK services PMI plummeted to 50.0 in November, the worst in 13 months, and below estimates of 51.9.
The UK manufacturing PMI fell to 48.9 in November, the worst reading in nine months, and missing estimates of 50.5.
On trading, the GBP/USD pair fell 0.6% as of 17:29 GMT to $1.2520.
Loonie
The Canadian dollar fell 0.1% against the greenback as of 17:31 GMT to 0.7152.
Earlier Canadian data showed retail sales rose 0.4% in September, while core sales rose 0.9%, passing estimates of a 0.3% rise.
US Dollar
The dollar index rose 0.6% as of 17:23 GMT to 107.6, with a session-high at 108.7, and a low at 106.9.
New York Fed President John Williams said in a recent interview that US inflation is falling towards the 2% target in tandem with lowering interest rates.
Earlier US data showed the S&P combined PMI rose to 55.3 in November, a 31-month high, from 54.1 in the previous reading, marking April 2022 highs.
The University of Michigan's consumer confidence survey rose 1.8% this month to 71.8, up from 70.5 in October, and below estimates of 73.