Intense battle between bulls and bears causes gold to fluctuate by 3%, Citigroup warns that gold prices may drop to $3,800

According to the Zhitong Finance APP, gold continued its decline on Monday as progress in U.S.-China trade negotiations weakened investors' demand for safe-haven assets. Spot gold fell sharply by 3.2%, dropping below $4,000 per ounce for the first time since October 10. Meanwhile, U.S. Treasury bonds declined—even as the market still expects the Federal Reserve to further ease monetary policy this week, rising U.S. Treasury yields diminished the appeal of gold as a non-yielding asset.

However, gold saw a slight rebound on Tuesday. As of the time of writing, spot gold was up 0.57%, priced at $4,004.26 per ounce. Although gold has significantly retreated from its previous record high of $4,380 per ounce, the price of gold has still risen over 50% this year. Continued purchases of gold by central banks and the so-called "currency devaluation trade" (where investors sell sovereign bonds and currencies to avoid risks associated with expanding fiscal deficits) have supported gold prices and attracted a large number of retail investors.

Chris Weston, head of research at Pepperstone Group, stated in a report: "Although gold continues to make lower lows, and futures trading volume remains high on down days, it is not easy to try to catch the bottom at this time." "A more prudent approach is to let others make the difficult attempts first, and then tactically buy the rebound after prices find a bottom."

The recent sharp fluctuations in gold prices have become a hot topic at the London Bullion Market Association (LBMA) precious metals annual conference held this week in Kyoto. John Reade, market strategist at the World Gold Council, mentioned at the conference that the pace of central bank gold purchases has weakened compared to before, and a deeper adjustment may be welcomed by professional traders. The LBMA annual conference is the most important annual gathering in the global precious metals industry.

Analysts from Citigroup, including Max Layton, pointed out in a report released on Monday that the resumption of cooperation between the U.S. and China, the waning momentum of gold prices, and the anticipated end of the U.S. government shutdown could drive gold prices lower in the coming days or weeks. Citigroup expects gold prices to fall to $3,800 per ounce in the next three months.

The market currently widely expects the Federal Reserve to cut interest rates by another 25 basis points at this week's policy meeting. This would mark the second consecutive rate cut by the Federal Reserve. Meanwhile, the market is also paying attention to the final list of five candidates to succeed Federal Reserve Chairman Jerome Powell. U.S. Treasury Secretary Mnuchin confirmed on Monday the final list of five candidates to succeed Federal Reserve Chairman Powell. Mnuchin revealed that the candidate pool has been narrowed down to five individuals: current Federal Reserve Board members Christopher Waller and Michelle Bowman, former Federal Reserve Governor Kevin Warsh, White House National Economic Council Director Kevin Hassett, and BlackRock executive Rick Rieder.

Mnuchin, who is leading the selection process, reiterated his plan to conduct a new round of interviews and hopes to submit a "high-quality candidate list" to Trump after the Thanksgiving holiday. Trump himself has also indicated that he expects to finalize his nominee by the end of this year