Gold Prices Drop After Touching Peak, Strong Dollar Becomes the Main Trigger

The commodity market experienced interesting dynamics this week. Gold prices dropped significantly after previously reaching their highest levels, as investors began taking profits and reassessing their positions amid the ongoing strengthening of the dollar. The increasing strength of the dollar has increased the cost burden for buyers outside the United States, creating barriers to global demand absorption.

Mechanism Behind the Gold Price Decline

This decline in gold prices was triggered by two main mechanisms. First, a wave of profit-taking by traders who had secured gains from the previous rally. Second, the dollar’s appreciation makes this precious metal more expensive for international buyers, as most gold transactions are conducted in dollars. The combination of these two factors has created noticeable selling pressure in both the spot and futures markets.

Market Focus Shifts to Federal Reserve Decision

According to Odaily, market participants are now focused on the upcoming announcement by U.S. President Donald Trump regarding the nomination for the next Federal Reserve Chair. This announcement is scheduled for Friday and is considered a key factor in determining market direction in the coming weeks. The decision on who will lead the U.S. central bank has broad implications for global monetary policy and, of course, gold movements.

Analysis: Kevin Warsh as a Potential Candidate

Trump’s advisors have signaled strongly that Kevin Warsh is one of the candidates being considered for the position. Analysts from Saxo Bank note that compared to other figures previously mentioned, Warsh is seen as a less controversial profile and policy-wise does not show overly dovish tendencies. This perspective suggests that markets might respond positively if Warsh is chosen, given his more balanced approach to monetary policy.

By continuing to monitor the official announcement, investors should pay attention to how this Federal Reserve decision will influence the dynamics of the gold market, whether it will decline further or even reverse and rise in the upcoming quarter.