On Tuesday (November 7th), the US dollar rose, world stock markets regained ground, Wall Street stock markets surged, and investors evaluated the Federal Reserve's comments that the US economy was too strong and may need to raise interest rates again to curb inflation. The rise in risk aversion caused by tensions in the Middle East has subsided, and the risk appetite before Powell's speech pushed gold prices to a new low in nearly two weeks, reaching $1956.57 per ounce.
Spot gold closed at $1969.07 per ounce on Tuesday, down 0.45%.
COMEX December gold futures closed down $15.10 per ounce, or 0.76%, at $1973.50 per ounce.
COMEX December silver futures closed 2.78% lower at $22.589 per ounce, missing the entire range of $23 per ounce.
Market News Analysis
In the past few weeks, the prices of gold and silver have fallen due to the political premium accumulated by these two metals starting to decline after the Israeli-Palestinian conflict earlier last month.
Another factor contributing to the weakness of precious metal prices is the reduced demand for safe haven positions. Recently, the US stock market has continued to be bullish, and Nasdaq stocks have continued to rise. The Standard&Poor's 500 Index and the Nasdaq Composite Index are expected to record their longest consecutive gains in nearly two years. Therefore, the fear of missed opportunities prompts traders to turn their attention to the stock market rather than non yielding assets.
Despite recent market trends, there are still reasons to be optimistic about precious metals. That is to say, a catalyst that may cause upward pressure on its prices is a pullback in interest rates. Last month, the yield of the US 10-year treasury bond bond broke 5.0%, but it has since corrected sharply, falling below 4.6% today. If this adjustment accelerates in the short term, then the background of gold and silver will become more constructive.
Meanwhile, after the market raised expectations for next year's interest rate cut, the US dollar attempted to regain ground. Gold has shown signs of weakness and is under pressure as the US dollar strengthens.
Gold is still under pressure due to the rise in US treasury bond bond yields and mixed signals from Fed officials.
Federal Reserve Governor Bowman said in a speech to the Ohio Bankers' Union on Tuesday that she believes that recent GDP data proves that the economy has not only "remained strong" but may have accelerated, requiring the Federal Reserve to raise policy interest rates. Bowman said, "I still anticipate that we will need to further raise the federal funds rate
Federal Reserve Governor Warren said on Tuesday that the US economy grew at an annualized rate of 4.9% in the third quarter, which is a "blowout" performance. "When we consider future policies, we need to closely monitor it.
Wall Street has shown an optimistic sentiment, which poses resistance to safe haven assets. Federal Reserve officials led by Federal Reserve Governor Lisa Cook continued to use the news line. She stated on Monday that the current interest rate policy is sufficiently restrictive to achieve price stability.
Federal Reserve Chairman Jerome Powell will deliver speeches on Wednesday and Thursday, with a focus on whether he will maintain the more dovish tone adopted after last week's Fed policy meeting.
If Powell opposes relaxing financial conditions later this week, it sounds more hawkish... I think the dollar can rebound, "said Kong from CBA.
Focus on financial data and events on Tuesday (Beijing time)
① 15:00 German October CPI monthly rate final value
② 15:45 French September Trade Account
③ 17:30 Bank of England Governor Bailey delivers a speech
④ 18:00 Eurozone September retail sales monthly rate
⑤ 22:15 Federal Reserve Chairman Powell delivers a speech at the event
⑥ 23:00 US September wholesale sales monthly rate
⑦ The next day at 02:40, Federal Reserve Williams delivered a speech
