Banyan Gold Corp. (TSXV: BYN, OTCQB: BYAGF)
The New Yukon Gold Rush
After a cumulative rise of $147 last week, the price of gold fell sharply on Monday, December gold futures was at $2,628.50 per ounce by the close of trading on Monday (November 25), a single-day drop of $90, which is the largest single-day decline since November 2020.
Meanwhile, the three major U.S. stock indexes closed collectively higher on Monday, with the Dow up 0.99 per cent to a new record high, Nasdaq up 0.27 per cent, and the S&P 500 up 0.30 per cent, near its record level. The dollar index fell 0.55% to 106.971.
One of the main reasons why a weaker dollar failed to boost gold today was a change in investor sentiment after a series of news over the weekend. In a trading week that was shortened for U.S. stocks because of the Thanksgiving Day closure, investors seem more interested in risky assets other than safe-haven assets like gold.
One of the news that led to the shift in investor sentiment was U.S. President-elect Donald Trump’s selection of hedge fund manager Scott Bessent to serve as Treasury Secretary. Analysts point out that Bessent advocates tax reform and focuses on fiscal discipline, and his election as U.S. Treasury Secretary could reduce the likelihood of extreme tariff policies during Trump’s tenure.
According to Financial Times, in response to Trump’s claim of a flat 20% tariff on all imports, Besant said these are “maximising positions that may be moderated in negotiations with trading partners”.
Meanwhile, Lebanon’s deputy parliamentary speaker Elias Bou Saab said there were “no serious obstacles” to the start of a US-sponsored 60-day ceasefire agreement to end fighting between Israel and Lebanon’s Hezbollah, Reuters reported.
John Kirby, coordinator of strategic communications at the U.S. National Security Council, said Monday that the U.S. government’s discussions on a cease-fire between Lebanon and Israel have been “constructive” and moving in the right direction toward an agreement. Kirby said the trajectory was “positive” and that they were close to reaching an agreement.
Analysts at Saxo Bank said Besant’s hawkish reputation has the potential to inject stability into the US economic landscape. This view may reduce investor anxiety about the U.S. debt situation, thus weakening the attractiveness of gold as a safe-haven asset.
Analysts believe it was tensions involving Ukraine and Russia which pushed the price of gold up by 6.5 per cent last week, so it seems unsurprising that gold prices fell today as geopolitical crisis eased.
It’s worth pointing out that gold and the US dollar fell in tandem today. Normally, when the dollar weakens significantly, the price of gold rises.
Jerry Chen, senior analyst at foreign exchange broker Kasper Group, said that the safe-haven attribute overlaid on the relative strength of the U.S. economy has helped the dollar index to move sharply higher for eight consecutive weeks, closing last week at the 107 mark, and briefly touching 108 in mid-week.
At present, the interest rate market is seriously divided on the outlook for December interest rates, and bets on keeping interest rates unchanged are already close to 50 per cent. Since October’s Personal Consumption Expenditure Price Index will be released on the 27th this week, if inflation unexpectedly downward, it may slow down the upward trend of the dollar and continue to help pushing gold prices higher.
