It is learned from the International Finance News APP that on Thursday, the price of gold fell for the fifth consecutive trading day, as the market expects tighter future monetary policies and the geopolitical risks may weaken after Trump took office, causing the gold price to drop to the lowest level in two months.

This is the longest consecutive drop in gold since mid-February, with the gold price still at historical highs just two weeks ago. City Index and FOREX.com market analyst Fawad Razaqzada stated that gold's weakness is mainly influenced by two factors. One is the market's expectation that after Trump takes office, U.S. monetary policy may remain relatively tight in 2025.

The yield on 10-year government bonds is close to 4.5%, which means that the opportunity cost of holding no return or low-yielding assets is increasing, putting pressure on gold. The hawkish pricing of U.S. interest rates has also strengthened the U.S. dollar, further pressuring the gold price measured in dollars.

The second factor is the reduced expectation of geopolitical risks by investors. Razaqzada stated that Trump's successful election win has led the market to expect easing tensions in the Middle East and between Russia and Ukraine after he takes office.

According to Dow Jones market data, on October 30th, the settlement price of gold futures (most active contract) set a historical high of $2800.80 per ounce. However, the settlement price for the December contract on Thursday was $2572.90, a daily drop of $13.6 or 0.5%, hitting the lowest level since September 11, down 8.1% from the historical high in just two weeks.

Naeem Aslam, Chief Investment Officer at Zaye Capital Markets, believes that gold is currently experiencing the necessary adjustments. Recent U.S. inflation data indicate the need for measures to control inflation, leading traders to believe that the Fed's interest rate cuts will be slower, which directly affects the price of gold.

Samer Hasn, Senior Market Analyst at XS.com, pointed out that the flow of U.S. inflation and labor market data suggests a reduced likelihood of rate cuts next year. U.S. Department of Labor data show that initial jobless claims decreased by 4000 to 0.217 million in the week ending November 9, the lowest level since May. Meanwhile, the wholesale price year-on-year growth rate rose to 2.4% as of October, the highest level in four months.

Although these data did not significantly alter the Fed's expectations, the market's hopes for an interest rate cut at the beginning of January have somewhat weakened, which may be one of the reasons for the continued decline in gold prices. CME's FedWatch Tool shows that the Fed's meeting on December 18 is expected to cut rates by 25 basis points, while the probability of a rate cut on January 29 has dropped to less than 26%, significantly down from over 60% a month ago.

Meanwhile, Michael Armbruster, Co-Founder and Managing Partner of Altavest, stated that the Trump administration plans to establish a new institution called the Department of Government Efficiency (DOGE) to reduce government expenditures and the federal deficit, which has driven the sharp rise in the US dollar index and put pressure on gold prices. Armbruster noted that Trump has surrounded himself with a group of deficit hawks advocating for free markets, including appointing Musk and Vivek Ramaswamy as heads of DOGE. He pointed out that cutting federal spending is a positive step towards addressing the $1.8 trillion deficit.

Against this backdrop, the price of gold has dropped to an important support level of around $2500. Armbruster stated that this is a crucial level that gold bulls need to defend. However, he added that the demand for gold from foreign central banks remains a key supporting factor for gold prices. Juan Carlos Artigas of the World Gold Council told foreign media at the end of October that despite central banks' gold purchases reaching 694 tons so far this year, slightly lower than the 2023 record, central bank demand remains strong.

In general, Armbruster remains bullish on gold, but if the DOGE team succeeds in cutting federal government spending, the prospects for gold's rise will weaken.