According to AXIOS, a senior American official stated on Monday that Israel and Lebanon have agreed to the terms of a ceasefire agreement to end the conflict between Israel and Hezbollah. Both sides have yet to formally announce that an agreement has been reached.

The American official said that the Israeli security cabinet is expected to approve the agreement on Tuesday. An Israeli official confirmed that the cabinet will hold a meeting on Tuesday. The American official stated, 'We believe both sides have reached an agreement. We are on the goal line, but the resolution has not been formally passed yet. The Israeli cabinet needs to approve the agreement on Tuesday, but there will always be issues before that.'

After the news broke, spot gold continued its intraday decline, falling below $2640, down more than $80 from the intraday high; WTI crude oil and Brent crude oil both dropped sharply by 2%.

Earlier, Israeli officials had already hinted that an agreement to end the fighting with Hezbollah could be finalized 'within days,' as U.S. diplomats work to facilitate a ceasefire agreement that would end more than a year of conflict between Israel and the Lebanese armed group.

Two Lebanese officials stated that the proposed agreement will require a preliminary ceasefire of 60 days, during which the Israeli army will withdraw from Lebanon, and Hezbollah will move its weapons north of the Litani River, 30 kilometers from the UN-designated border.

The agreement will be based on UN Security Council Resolution 1701, which calls for the end of the 2006 Israel-Hezbollah war, but has never been fully implemented or enforced.

According to the terms of the proposal, the Lebanese army will take over the southern Lebanese areas from which the Israeli army and Hezbollah militants are withdrawing, with the support of the United Nations peacekeeping forces.

An informed source stated that the plan may proceed 'gradually' after the Israeli Defense Forces withdraw from southern Lebanon, followed by the entry of the Lebanese army.

However, it is still unclear whether Israel still insists on Washington issuing a written letter to guarantee Israel's right to strike Lebanon when threatened by Hezbollah, which was previously considered a core demand.

In addition to geopolitical factors, UBS analyst Giovanni Staunovo noted that two factors weighing on gold prices include profit-taking after last week's strong rally in gold prices and Trump's nomination of Basant for the next U.S. Treasury Secretary. Some market participants believe he has a smaller negative impact on the trade war because he understands the market, and his appointment may reduce the likelihood of the U.S. imposing high tariffs on trade partners.

Market participants are also focused on the upcoming release of the Federal Reserve's November FOMC meeting minutes, GDP data, and core PCE price index. Frank Watson, a market analyst at Kineis Money, stated in a report, 'The market generally expects the Federal Reserve to cut interest rates by 25 basis points at the next meeting on December 18, although traders have recently reduced their bets on this outcome.'

According to the Federal Reserve observation tool from the Chicago Mercantile Exchange (CME), traders currently believe there is a 56% chance that the Federal Reserve will cut rates by another 25 basis points in December. Giovanni stated, 'We still expect the Federal Reserve to cut rates by 25 basis points, but for the market, it is more important whether the dot plot shows a smaller rate cut next year.'

Article reposted from: Jin Shi Data