Gold prices experienced a significant decline on Tuesday, reaching nearly a two-month low, primarily due to a stronger dollar, heightened optimism about economic growth under a second Trump administration, and broader market shifts following the Nov. 5 U.S. presidential election.

Spot gold decreased by 0.8 percent, trading at $2,600.49 per ounce by 12:00 p.m. EST (1700 GMT), after previously dropping 1 percent to touch its lowest point since Sept. 20 at $2,589.59. Meanwhile, U.S. gold futures also fell, dropping 0.4 percent to $2,607.00.

The rise of the dollar index to a four-month high increased the cost of gold for holders of other currencies, while bitcoin saw a surge due to continued investor interest, particularly as they anticipate President-elect Donald Trump's inauguration in January. Additionally, U.S. Treasury yields edged higher.

Daniel Pavilonis, a senior market strategist at RJO Futures, commented, "I believe this is merely a corrective move within a longer-term bullish market. The current policies are expected to be quite inflationary. If we witness another wave of inflation, that should drive gold prices higher." Technically, the market appears ready for an upward movement, with support around $2,600, Pavilonis added.

Markets are closely monitoring a series of significant U.S. economic data this week, including the release of the October consumer price index on Wednesday, along with remarks from Federal Reserve Chair Powell and other U.S. central bank officials. Following the Fed's recent decision to reduce its benchmark interest rate by a quarter of a percentage point to the 4.50 percent–4.75 percent range, traders now see a 65 percent chance of another rate cut in December, compared to around 80 percent before Trump's election victory last week.

Gold, which was buoyed by pre-election euphoria as a "Trump trade," is now experiencing a dip due to optimism about growth, according to Carsten Menke, an analyst at Julius Baer. However, Menke noted that a multi-polar world and the "desire of emerging market central banks to be less dependent on the U.S. dollar and, in extreme cases, less susceptible to U.S. sanctions" still indicate a longer-term rise in gold prices.

In other metals, spot silver declined 0.3 percent to $30.6, platinum dropped 2.5 percent to $941.05, and palladium fell 3.8 percent to $943.50.

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