On Friday (November 3rd), although analysts did not intend to short gold in this environment, some said its price trend was disappointing as gold did not benefit from a significant decline in yields and a weak US dollar.
Commodity analysts say that gold prices continue to be driven by global political factors as the weakening of market concerns weakens the safe haven appeal of precious metals. Although the war between Israel and Hamas continues, the conflict in the Gaza Strip continues, and the ongoing chaos in the Middle East has been brought under control.
Spot gold is currently trading at $1992.32 per ounce, up 0.32%.
Christopher Vecchio said, "The political crisis driving up gold prices is becoming exhausted." Vecchio said that while political events can provide tradable momentum for the gold market, they do not help attract long-term investors. He pointed out that the rise of gold based on specific political events requires continuous escalation to maintain its safe haven buying. Vecchio stated that he withdrew from his gold position last week and will remain on the sidelines in the short term as he expects gold prices to consolidate. Most of the big moves for gold have been completed. But I don't want to short gold because the basic background of the weakening US dollar and declining bond yields is favorable for gold, "he said. I think gold can continue to rise, but for potential traders, this will be a frustrating ordeal
US economic data shows that the number of first-time applicants for unemployment benefits has reached its highest level in seven weeks, while the number of continuing applicants for unemployment benefits has risen to its highest level since April. The most noteworthy thing is that according to the non farm employment report, the economy added 150000 job positions in October, lower than the market consensus expectation of 180000. The unemployment rate has also increased from 3.8% to 3.9%. Manufacturing data shows a complex situation, with the ISM service industry PMI falling more than expected on Friday, but still in the expansion zone. Disappointed economic data led to a sharp decline in US dollar and US treasury bond bond yields. Although the decline in US dollar and US bond yields has somewhat alleviated gold, this has been largely offset by traders selling gold in favor of risk driven assets, especially stocks and currencies. But traders now expect a lower risk premium for gold due to concerns that the conflict will spread to the wider Middle East region. The international efforts to promote a ceasefire have further promoted this concept.
Gold prices were able to recover lost ground during the Federal Reserve's interest rate meeting. Economists at Commerzbank in Germany say that, Strong non farm employment data is putting pressure on gold. Assuming the situation in the Middle East does not escalate, it may be difficult for gold prices to consistently climb above the $2000/ounce mark, as the possibility of further interest rate hikes by the Federal Reserve has become less likely, but has not yet been completely ruled out. Interest rate expectations may rise rapidly again, thereby suppressing gold prices, especially if the US economy shows sustained resilience
Trade Nation Senior Market Analyst David Morrison describes gold as a market looking for new catalysts.
Ole Hansen, head of commodity strategy at Shengbao Bank, stated that he is neutral towards gold; He also pointed out that consolidating around the current level would be healthy. After gold prices rose nearly 7% in October (the best monthly performance since March), the outlook remained neutral. After the gold price rose nearly $200/ounce last month, profit taking once again appeared above $2000/ounce and has since been suspended. It has risen significantly in the short term and the market needs to consolidate, but so far, the adjustment has been relatively shallow, with support at $1953/ounce, above the 38.2% retracement level of $1933/ounce, the 200 day moving average, and the aforementioned rebound, "Hansen said. The downside is that, Gold prices must fall back to $1900 per ounce to put this new upward trend at risk.
The only important economic report to be released next week will be the preliminary consumer confidence survey by the University of Michigan.
Monday: Federal Reserve of Australia Monetary Policy Decision
Thursday: Weekly unemployment benefits in the United States; Powell participates in group discussion on Friday
Friday: University of Michigan Preliminary Consumer Confidence Index
At present, the market focus is shifting to the next report before the next Federal Reserve meeting in December, including two other inflation data and one employment report.
