• Gold prices affected by advancing US Dollar Index and rising Treasury yields following Trump's election victory.
• Market adjusts to less dovish Fed outlook with rate futures indicating lower chances of a December rate cut.
• Gold ETFs experience significant outflows, signaling investor shift toward riskier assets amid geopolitical tensions.

Gold prices dropped below $2,600 for the first time since mid-September on Tuesday as the Greenback extended its gains and hit a six-month high, according to the US Dollar Index (DXY). Rising US Treasury yields also weighed on Gold prices. At the time of writing, the XAU/USD trades at $2,599, down 0.77%.

Investors continued to digest former US President Donald Trump's victory. Attention turned to his first cabinet appointments, which would give some cues regarding pushing his policies of lowering taxes, imposing tariffs, and fighting illegal immigration.

On Tuesday, news emerged that Mike Waltz had been named the National Security Advisor and Marco Rubio would be appointed Secretary of State. Waltz and Rubio are known for their tough stances on China, hinting that tariffs would likely be imposed.

Meanwhile, market participants expect a less dovish Federal Reserve (Fed) and have raised the neutral or terminal rate to around 3.99%, according to fed funds rate futures data provided by the Chicago Board of Trade (CBOT).

The CME FedWatch Tool shows that odds for a quarter-point percentage interest rate cut at the December 2024 meeting were lowered from 65% to 58% and continue to decrease.

According to the World Gold Council's (WGC) November 2024 review, the non-yielding metal accumulates losses due to outflows from Gold ETFs.

“Global gold ETFs shed an estimated US$809mn (12t) during the first week of November, with the bulk of outflows stemming from North America, which were partially offset by strong Asian inflows. Potentially signaling renewed fears around the resumption of the trade war between the US and China. Additionally, COMEX net positioning also fell 74 tonnes, an 8% drop from the prior week,” the WGC wrote.