On Wednesday (October 25), the gold price withstood the resistance of the rise of the US treasury bond bond yield and the strengthening of the US dollar, initially overcame the 1980 pass, and once hit a new high of $1987.15/ounce this week. The Middle East crisis continues to exist, and the role of gold as a safe haven remains prominent.
Spot gold is currently trading at $1983.36 per ounce, up 0.2%.
COMEX's December gold futures rose by $8.8 per ounce on the 25th compared to the previous trading day, closing at $1994.9 per ounce, or 0.44%.
COMEX December silver futures closed 0.47% lower at $23.007 per ounce. COMEX January silver futures closed 0.48% lower at $23.132 per ounce.
Market News Analysis
Due to the ongoing conflict between Israel and Gaza, as well as expectations for key economic indicators such as the US GDP data and PCE price index in the third quarter, gold prices rose slightly today. In stark contrast to gold's performance, spot silver fell 0.3% today to $22.87 per ounce. However, other precious metals such as platinum and palladium recorded an increase.
The probability of the Federal Reserve maintaining interest rates unchanged in the 5.25% -5.50% range in November is 97.5%, and the probability of raising interest rates by 25 basis points to the 5.50% -5.75% range is 2.5%. The probability of maintaining interest rates unchanged by December is 76.0%, the probability of a cumulative 25 basis point increase is 23.4%, and the probability of a cumulative 50 basis point increase is 0.5%.
US bond yields rose sharply across the board. According to data, the yield of US 10-year benchmark treasury bond bonds rose 11.49 basis points to 4.9378%, and intraday trading was between 4.9570% and 4.8040%. The two-year US Treasury yield rose 4.6 basis points to 5.1185%, with intraday trading between 5.1290% and 5.0499%. The yield difference between the three month Treasury bill and the 10-year US Treasury bond increased by 8.964 basis points to -53.480 basis points. The yield spread of the 02/10 year US Treasury bond increased by 11.043 basis points to -18.281 basis points. As US yields rise, the US dollar continues to rise, which to some extent limits the sharp increase in gold prices. The Federal Reserve's interest rate decisions are monitored by the CME FedWatch tool and are expected to be influenced by these economic indicators. If there are signs of an economic slowdown, the Federal Reserve may delay raising interest rates, which may further support gold prices.
The recent rise in gold prices occurred against the backdrop of increased business activity in the United States in October this year, which is in stark contrast to the decline in the eurozone. At the same time, due to economic recovery and increased demand for gold, China's gold consumption has significantly increased. According to statistics from the China Gold Association, China's gold consumption increased by 7.32% in the first three quarters of 2023.
According to Wind Information data, as of October 25th, out of over 10000 public funds in the Chinese market, the top 25 products with high returns this month were all gold themed funds, with returns above 5.57%. Multiple analysts have stated that due to recent fluctuations in international market fundamentals, risk aversion sentiment has driven international gold prices significantly higher, benefiting from the rise in underlying asset prices and the synchronous rise in gold themed fund yields; In the short term, there is still room for international gold prices to rise due to factors such as the approaching expectation of the Federal Reserve's interest rate hike and the peak of US bond yields. Fan Rui, senior metal analyst at Guoyuan Futures, said that investors already have concerns about US inflation and global economic growth, and expect the Federal Reserve to raise interest rates soon, which will give international gold prices momentum to strengthen.
Darin Newsom, a senior market analyst at Barchart.com, warned investors in a social media post that precious metals look "a bit tired". He said, The daily random indicators are in an overbought state. All of these will be held before the Federal Reserve meeting next week. Christensen pointed out that although gold is attracting strong safe haven demand, some analysts have stated that the hawkish Federal Reserve continues to pose risks to precious metals. The market expects the Federal Reserve to maintain interest rates unchanged next week. However, it is expected that the hawkish stance of long-term rise will continue to support higher bond yields and strengthen the US dollar, which are two traditional resistance to gold.
Although some analysts remain cautious about gold, others suggest that investors should not overlook the market momentum.
In a recent interview with Kitco News, Trade Nation senior market analyst David Morrison stated that the recent rebound has broken through all major resistance levels. I think the market wants to see $2000, although the price can consolidate, it may be the driving force behind the market reaching a historic high. Morrison said that although the Federal Reserve does not intend to cut interest rates soon, the end of the tightening cycle does provide some support for the future of gold.
Meanwhile, Morrison added that as investors begin to focus on potential debt issues in the United States, the negative correlation between gold and bond yields may continue to remain weak. "$33 trillion is a very convincing reason why you don't want to hold US treasury bond bonds now," he said. Debt was not important before it happened, and now it is
Investors should continue to pay attention to the speech of Federal Reserve Chairman Jerome Powell to find clues about the future path of interest rate hikes, which in turn should provide new impetus for gold prices. At the same time, attention should also be paid to the US Q3 GDP report released on Thursday and the European Central Bank (ECB) interest rate decision, as well as the US Personal Consumption Expenditure (PCE) price index on Friday.
Focus on financial data and events on Thursday (Beijing time)
① 18:00 UK October CBI retail sales difference
② 20:15 European Central Bank announces interest rate resolution
③ 20:30 Initial claims for unemployment benefits for the week from October 21st in the United States, initial annualized quarterly rate of actual GDP in the third quarter of the United States, initial quarterly rate of actual personal consumption expenditure in the third quarter of the United States, initial annualized quarterly rate of core PCE price index in the third quarter of the United States, and monthly rate of durable goods orders in September of the United States
④ 20:45 European Central Bank President Lagarde Holds a Press Conference
⑤ 22:00 US September Housing Contract Sales Index Monthly Rate
⑥ 22:30 EIA natural gas inventory for the week from the United States to October 20th
⑦ The next day at 05:00, Intel announced its third quarter financial report for 2023
