On Tuesday morning (November 19th) in the Asian market, spot gold held its overnight gains and is currently trading around $2612.01 per ounce. After falling for six consecutive days, the gold price surged about $50 on Monday, regaining the 2600 mark and closing at $2611.57 per ounce. Large investors around the world are exiting the popular Trump trade. The big rise of the dollar has stalled, and the increased uncertainty of the Russia-Ukraine conflict has renewed the demand for risk aversion.

From a technical perspective, if the gold price can remain above the 2600 level, it is expected to further test the resistance near the 55 day moving average of 2642.07 in the short term.

Daniel Pavilonis, Senior Market Strategist at RJO Futures, said, "Part of the reason is Biden's announcement that Ukraine can use long-range missiles to strike deep into Russian territory. I believe this has to some extent driven safe haven demand for gold“

Gold is seen as a safe investment during periods of economic and geopolitical turmoil, with prices hitting their biggest weekly decline in over three years last week as tariffs proposed by President elect Trump are seen as a potential inflation driver that could prompt the Federal Reserve to slow down its rate cuts.

This in turn pushed the US dollar index to a new one-year high last Thursday. However, after rising 1.6% last week, the US dollar index fell 0.44% on Monday, closing at 106.20, marking two consecutive trading days of decline. The weakening of the US dollar has lowered the price of gold for buyers using other currencies.

The US dollar index hit a new high of 107.07 in over a year last week, as people expected that Trump's victory could lead to increased tariffs and potentially stimulate inflation, thereby slowing down the pace of the Federal Reserve's interest rate cuts. In the short term, there is still a risk of further pullback in the US dollar, which is expected to provide further opportunities for gold prices to rebound.

The yield of US treasury bond bonds fell slightly on Monday, because traders digested the still strong US economy and the possible policies of the Trump administration after the Republican Party won the presidential election and the control of Congress.

Prior to the November 5th US election, yields rose on the expectation of a resounding Republican victory. Since the Republican victory, yields have only slightly increased as traders are evaluating which policies are now likely to be implemented.

The yield on the 10-year treasury bond bond fell 1.2 basis points to 4.414% late Monday. Last Friday, it reached 4.505%, the highest since May 31st.

Will Compernolle, macro strategist at FHN Financial, said, 'The Republican sweep may have been increasingly digested by the market, but I believe there is still a lot of uncertainty about the federal policy outlook for next year.'.

Analysts say that the Trump administration's reduction of tax rates and relaxation of business regulations may promote economic growth, while other policies, including cracking down on illegal immigration and enacting new tariffs, may stimulate inflation but also suppress the economic strength of the United States.

Traders are also unsure whether Trump is likely to introduce broad tariff policies or use them as a negotiation strategy.

Pavilonis said, "Regardless of whether the Federal Reserve cuts interest rates or not, I believe technically, gold prices hope to return to around $2700

Despite recent data showing stagnant progress towards the 2% target for inflation, the market generally expects the Federal Reserve to cut interest rates for the third time in December. At least seven Federal Reserve officials will give speeches this week.

According to the FedWatch tool of the Chicago Mercantile Exchange, traders believe that there is a 54% chance that the Federal Reserve will cut interest rates by 25 basis points at its meeting on December 17-18, and a 46% chance that it will pause interest rate cuts in December.

There are not many US economic data to be released this week. The National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index rose from 43 in October to 46 in November, the highest since April, as people optimistically believe that the recent election will drive regulatory adjustments and stimulate housing construction.

A survey shows that the confidence of US residential builders rose to the highest level in seven months in November, and expectations for sales in the next six months also rose to the highest level in about two and a half years.

The market is waiting for Trump to announce who he has chosen as Treasury Secretary. According to numerous media reports, the list of potential candidates has been expanded to include former Federal Reserve Governor Kevin Warsh and billionaire Marc Rowan.

Chandler said, "My feeling is that from these appointments, and even this discussion about the Secretary of the Treasury, we hope to ensure that the Secretary of the Treasury supports tariff measures

Investors need to focus on news related to the geopolitical situation between Russia and Ukraine, which is one of the main sources of momentum for the rebound of gold prices on Monday.

The Kremlin stated on Monday that Russia will respond to the Biden administration's reckless decision to allow Ukraine to launch American missiles into Russian territory, stating that it will directly involve the United States in the conflict.

For months, Russia has been warning the West how it will interpret this decision, stating that it will increase the risk of conflict between Russia and the US led NATO alliance.

The New York Times and Reuters reported that the Biden administration has made a decision on remote strikes, but Washington has not officially confirmed it.

Kremlin spokesman Dmitry Peskov said, "This decision is reckless and dangerous, aimed at achieving a qualitative change and increasing the level of US involvement in this conflict

He said that President Putin clearly expressed Russia's position in his speech in St. Petersburg in September.

Putin stated on September 12th that Western countries' approval of this measure would mean "direct participation of NATO countries, the United States, and European countries in the Ukraine war," as NATO's military infrastructure and personnel would have to be involved in missile targeting and launch.

Peskov said, "It is clear that the outgoing Washington government intends to take measures to further fuel the fire and stir up tension in this conflict

The New York Times and Reuters cited sources as saying that the US move was to some extent a response to reports of North Korean soldiers arriving in the Kursk region of Russia to help repel Ukrainian soldiers.

US Deputy National Security Advisor Jon Finer said that Russia's deployment of foreign troops on its own territory has escalated the conflict. Russian officials say they can deploy any troops they want within Russian territory.

A Russian official who declined to be named and has close ties to the Kremlin said that if the US move is confirmed, it would be a highly provocative move for an outgoing government, but it would not change the outcome of the war.

Russian lawmaker Maria Butina told Reuters reporters, "The Biden administration is trying to escalate the situation to the maximum extent while they are still in power and in office

If this decision has already been made, I really hope that Trump can overcome it, because they are taking the risk of detonating World War III, which is not in anyone's interest. "(Full Story)

Russian officials have repeatedly warned that the West is playing with fire by probing the limits of what a nuclear power may or may not tolerate.

Putin has changed Russia's nuclear theory, stating that any conventional attack launched with the assistance of nuclear powers against Russia can be considered a joint attack against Russia.

Putin stated at the end of October that if the United States and its NATO allies help Ukraine strike Russia's hinterland with Western long-range missiles, the Russian Ministry of Defense will study different ways of responding.

On this trading day, the initial value of the annualized total number of construction permits in the United States for October and the annualized total number of new housing starts in October will be released. Kansas Federal Reserve Chairman Schmid will give a speech on economic and monetary policy, and investors also need to pay attention.

Daily chart of spot gold