By Dilin Wu

Gold is under intense pressure on multiple fronts. Institutional sell-offs have driven prices down nearly 3% since Monday, pushing it below $2,600 for the first time since September 20. The trading narrative has shifted sharply from risk-off hedging to an ‘America First’ stance. The steady unloading of GLD holdings by the SPDR Gold Trust and other major institutions since November underscores this pivot.

Adding to the pressure, central banks have slowed their gold purchases, with the People’s Bank of China pausing for six months. With both institutional and central bank support waning, gold’s near-term outlook appears increasingly bleak. If U.S. CPI and retail sales data this week exceed expectations, the dollar index could test 106, further tightening the screws on gold.

On a higher timeframe, Trump’s reappointment of trade hawk Robert Lighthizer has fueled expectations of stronger tariffs, a stronger dollar, and rising inflation—signaling the Fed may hesitate to cut rates in Q1 2025, creating even more headwinds for gold. Still, factors like the U.S. debt situation and potential shifts in the job market may offer some medium-term support.

Wu Research Strategist at Pepperstone