This morning, the gold price (XAU/USD) recorded a significant drop of more than $30, to stabilize around $2,670, after the announcement of Donald Trump designating Scott Bessent as the next Treasury Secretary. A decision seen as reassuring by the markets, which reduced the attractiveness of investments in safe haven assets.
A strategic appointment that reassures Wall Street
Scott Bessent, former hedge fund manager and founder of Key Square Group, is known for his prudence and expertise in complex economic environments. His appointment as Treasury Secretary aims to stabilize markets while attenuating certain controversial aspects of Donald Trump’s protectionist economic policies.
Also read: Gold plunges by more than 2%! Should we be worried?
This announcement comes in a climate marked by concerns about inflation and trade tensions. Bessent has previously expressed ambitious economic priorities, including reducing the U.S. public debt and increasing domestic oil production. This guidance appears to calm investors, reducing demand for assets like gold, traditionally favored in times of uncertainty.
Towards an easing of geopolitical tensions
The fall in gold prices could also be influenced by rumors of progress in ceasefire talks between Israel and Hezbollah. Despite recent clashes, signs of progress in the US-led negotiations are raising hopes of an imminent agreement, thereby reducing geopolitical risks and, consequently, flows towards safe havens.
Technical analysis: gold’s contradictory signals
On a technical level, thegold has retreated towards the 50-day simple moving average (SMA)located around $2,671. This decline could result in the formation of a bearish “Bearish Engulfing” candlestick pattern if the price closes at or below this level.
However, technical indicators are sending mixed signals. The MACD (Moving Average Convergence Divergence) indicator recently crossed its signal line, offering a potential buy signal. Furthermore, the overall trend for gold remains bullish. A close above $2,721 would set the stage for a move towards new all-time highs, with a potential target at $2,790.
Economic outlook: challenges for the new secretary
Scott Bessent has made known his commitment to strict fiscal policy. It aims to reduce the public deficit to 3% of annual GDP, while maintaining economic growth of 3% per year and increasing daily oil production by 3 million barrels. These objectives, if achieved, could influence the prices of raw materials, including gold, due to better economic stability.
The impact of this appointment on financial markets and commodities remains closely monitored. As gold loses ground, investors continue to scrutinize political announcements and geopolitical developments that could influence current trends.
