Gold is losing its privileges

XAU/USD

Key zone: 3,850.00 - 3,950.00

Buy: 4,000.00 (on strong positive fundamentals); target 4,200-4,350; StopLoss 3,900.00

Sell: 3,850.00 (on a pullback following a retest of 3,950); target 3,650-3,500; StopLoss 3,950.00

Gold has found itself at the center of a contradiction: geopolitical uncertainty and strategic demand from central banks support its investment appeal, while a strong dollar, high real yields, and expectations of restrictive Federal Reserve policy limit its upside.

The November correction in XAU/USD has once again called into question the conventional behavior of safe-haven assets. Gold is losing its safe-haven premium, while the fundamental drivers of long-term demand have failed to prevent short-term selling.

A fundamental question arises: is the market genuinely reassessing gold's safe-haven status, or is this a temporary reallocation of capital driven by interest rates and dollar liquidity?

• If the decline in XAU/USD is primarily driven by monetary expectations and the closing of speculative positions, changes in these factors could restore demand.
• If investors consistently prefer dollar-denominated instruments, however, the traditional patterns of gold's behavior could remain ineffective for considerably longer.

One of the most significant factors for XAU/USD remains Federal Reserve monetary policy.

If investors have already priced restrictive Fed policy into the market, even the maintenance of high interest rates will not necessarily trigger another wave of selling. Conversely, the first signs of easing inflationary pressure could lead to a recovery in XAU/USD well before an actual reduction in the policy rate.

The result is twofold pressure: gold loses ground to the dollar through both the currency and interest-rate channels.

A Reminder:

On November 12, Reuters reported that spot gold had fallen approximately 2.7% to $3,880.93 per ounce by 18:55 GMT. At the same time, oil prices were rising as hopes for a peaceful resolution of the conflict faded. More expensive oil intensified inflation concerns and, with them, expectations that interest rates would remain high. Geopolitical escalation has therefore generated not only traditional safe-haven demand for gold but also a powerful negative monetary impulse.

For this reason, geopolitics should not be analyzed in isolation, but through the specific channels by which it affects the economy and financial system.

The next major test for gold will be the release of the U.S. Producer Price Index (PPI) for October.

If the figures exceed expectations, the market could increase its bets on further Fed tightening. This could potentially support the dollar and U.S. Treasury yields, creating additional pressure on XAU/USD.

Weaker data, by contrast, could reduce concerns about persistent inflation and stimulate a technical recovery in gold.

In subsequent trading sessions, speeches by Federal Reserve officials, changes in expectations regarding the central bank's December decision, movements in real yields, and news from energy markets will remain important.

So What Is the Outcome?

Gold's current performance does not prove that the precious metal has permanently lost its safe-haven status. It demonstrates a more complex phenomenon: safe-haven demand can no longer be considered separately from the cost of money, currency liquidity, and central banks' responses to inflation risks.

Official-sector gold purchases and substantial ETF inflows in the third quarter confirm continued strategic interest in the metal. However, this does not guarantee the stability of its market price over several trading sessions.

In the near term, the key indicators remain DXY, real U.S. Treasury yields, changes in interest-rate expectations, and XAU/USD's ability to recover above the breached levels of $3,850 and $4,000. Until sustained signs of a shift in the monetary environment emerge, short-term upward movements should be assessed cautiously.

So we act wisely and avoid unnecessary risks.

Profits to y’all!