Analysis of Gold News: On Thursday (November 9th), gold hit the bottom and rebounded higher in the US market. Due to the seventh consecutive week of increase in the number of Americans applying for unemployment benefits, it further proves that the labor market is cooling down. As of press release, spot gold has risen nearly $13 in the short term and is currently trading at $1962.87 per ounce. The number of initial claims for unemployment benefits in the United States last week remained basically unchanged from previous data, recording 217000. The four week average is rising, but still far below the level seen in summer. Therefore, it is expected that there will not be too much reaction in the market. Since the release of a series of data last week, there has been talk of a gradual slowdown in the job market. Due to the cooling of safe haven demand, gold has been continuously declining in recent days, and the focus has shifted to the speech of Federal Reserve Chairman Powell, with traders looking for interest rate clues. Gold prices have fallen by over $50 since hitting the $2000 level last week.
Several Fed officials who spoke this week maintained a balanced tone regarding the Fed's next decision, but pointed out that they will focus on the impact of economic data and rising long-term bond yields. Powell did not comment on monetary policy or economic prospects in his prepared speech at Wednesday's meeting. He plans to give a speech at another meeting on Thursday at 02:00 Eastern Time. According to the Chishang Exchange's FedWatch tool, investors expect an 85% chance that the Federal Reserve will keep interest rates unchanged at its December meeting, and a 70% chance of a rate cut as early as June next year. The lower interest rates enhance the attractiveness of zero return gold.
Market News Analysis
Powell delivered a speech during a group discussion at the International Monetary Fund in Washington, D.C. Powell stated that the Federal Open Market Committee (FOMC) is committed to achieving a sufficiently restrictive monetary policy stance to reduce inflation to 2% over time; We do not have confidence that we have achieved such a position: "Improving supply issues in the economy will help reduce inflation from its 40 year high in June 2022 to 2020; However, he stated that the improvement in economic conditions has done everything possible to reduce inflation. "Looking ahead, a significant portion of the progress made in reducing inflation may have to come from tightening monetary policies that suppress aggregate demand growth
The yield of US treasury bond bonds stopped the sharp decline last week and is rising, but it failed to depress the gold price. After Powell's speech, the US 10-year treasury bond bond yield and the US dollar index continued to rise.
Investors believe that the probability of the Federal Reserve keeping interest rates unchanged is 91%, while the possibility of the first rate cut is expected to be in June 2024, with a probability of 42%.
The gold market did not respond much to Powell's hawkish remarks. Spot gold has successfully gained solid support at around $1950 per ounce.
Philip Petursson, Chief Investment Strategist at IG Wealth Management, stated that the strengthening of the US dollar in 2023 has dragged down gold prices, but gold may experience significant breakthroughs in the near future. Petursson stated that even at $2000 per ounce, there is considerable room for gold prices to rise, and gold prices should rise significantly in the coming year.
For most of this year, gold has been dragged down by strength and the US dollar, "Petursson said. They are often negatively correlated, so as the US dollar strengthens, gold tends to weaken slightly. Now, if we think the US dollar will start to weaken from here, I think this is the basic situation for us to enter 2024, which is beneficial for gold
Petursson stated that IG believes that gold is undervalued by 20%. Once it seizes this offer and breaks through, firmly breaking through $2000 per ounce, we believe it may go even higher to the potential $2400 per ounce
Capital Economics predicts that gold prices will rise to $2100 per ounce by the end of 2024. Keiran Tompkins, a macro commodity economist at Kaitou, stated in a report that the conflict between Palestine and Israel is not expected to prevent the Federal Reserve from cutting interest rates next year. Our basic assumption is that the Israeli-Palestinian conflict will not lead to a significant increase in energy prices, although we acknowledge the tail risk of the conflict expanding to include oil producing countries and physical supply disruptions. Therefore, the current form of conflict is not enough for central banks to start loosening policies next year, "Tompkins said." The decline in energy prices means that the Federal Reserve will be more likely to lower inflation rates to its target of 2%. With inflation under control, Kaitou Macro expects to significantly lower interest rates next year.
"We expect that the Federal Reserve will cut the federal funds rate by 200 basis points next year from the first half of 2024. Therefore, our forecast is that by the end of 2024, the yield of 10-year US treasury bond bonds will decline from slightly higher than 4.50% at present to 3.75%, most of which is due to the decline of the real yield and the weakening of the US dollar."
Although investment demand is expected to push gold prices back to historical highs, Tompkins pointed out that he does not expect a significant breakthrough as price increases will affect physical demand.
Investors will closely monitor the Federal Reserve's Logan speech, the initial value of the Michigan Consumer Confidence Index in November, and UoM's 5-year consumer inflation expectations. These events may point the way for gold prices.
Technical analysis of gold: Gold prices have shown a significant downward trend recently. From the daily chart, it can be seen that gold continued to close negative yesterday, with prices constantly breaking bottom. The MA5 and MA10 crosses, the KDJ moves downwards, and the MACD cross hits the green energy bar. These technical indicators all indicate that the downward trend of gold has formed. The position near the center axis support position 1945. In terms of form, it is a trend of 3 consecutive negative periods. Be wary of today's bottoming out and rebound trend, with the support position of the central axis of week K at around 1940; There have been structural changes, which have deepened the adjustment space of the previous strong consolidation and long head transformation, while the small cycle is a more empty approach. The short-term situation has reversed.
On the 4-hour chart, the gold price experienced a rebound and recovery process after bottoming out. Although the technical indicators MA5 and MA10 have a dead cross, KDJ is running near the 20-day line, and MACD is running with a green energy bar dead cross. In the 4-hour chart, the random indicator has a double dead cross, which is a signal of a new low. The BOLL opening is downward, and the main short signal. From the hourly line, gold is still in a slow decline process, and the thinking remains low and long unchanged. Although the continuous downward trend has left gold prices relatively short, But repairing the gap will inevitably be to choose to take a low and long position as a favorable trend. The golden trend has entered to repair the gap above, so do not blindly empty it. The operating philosophy is still to choose a low and long position. The support position from 1948 to 1950 can be blocked here, even if it temporarily stabilizes; The upper pressure position is at the 1970 line position. It is expected that the gold price will break through this Friday. Please pay attention at that time.
The upper short-term focus is on the 1977 1975 line of resistance, while the lower short-term focus is on the 1940 1943 line of support.
Analysis of crude oil news: On Thursday (November 9th) in the US market, crude oil prices were trading around $75.50 per barrel. Due to concerns about weakened crude oil demand from various countries, oil prices fell by more than 2% on Wednesday, reaching their lowest level in more than three months. Market sources quoted data from the American Petroleum Institute late Tuesday as saying that US crude oil inventories increased by nearly 12 million barrels last week, which also put pressure on oil prices. If confirmed, this will be the largest increase since February. However, the US Energy Information Administration (EIA) has postponed the release of weekly oil inventory data until November 15th. The EIA stated on Tuesday that US crude oil production will be slightly lower than expected this year, but oil consumption will decrease by 300000 barrels per day, reversing the previously predicted growth of 100000 barrels per day. Weak demand has caused investors to worry. Brent crude oil has fallen below $80 per barrel for the first time in more than three months, with a weak fuel demand outlook overshadowing concerns that the Middle East crisis may lead to supply disruptions. In the Israeli-Palestinian conflict, oil prices once soared to over $90 per barrel. But currently, as the supply in the Persian Gulf has not been affected by the conflict, people's attention has shifted to macroeconomic deterioration and weak oil fundamentals, and the demand situation in the United States and Europe is not optimistic. Data from China, the world's largest crude oil importer, shows that its total exports of goods and services have contracted faster than expected, exacerbating concerns about the outlook for energy demand. The decline in international oil prices is mainly due to the slower than expected recovery of overseas economies, such as the US unemployment rate exceeding expectations in the past two months and the accelerated contraction of the new order index. Meanwhile, there have been no signs of tightening on the supply side. In the long run, the supply and demand pattern is relatively loose, but there may be a possibility of production reduction on the supply side in the short term, and there may be some support for prices.
Market News Analysis
On Thursday, Federal Reserve Chairman Jerome Powell's suggestion of a possible interest rate hike in the future shook hopes for strong demand in the stock and crude oil markets. The Brent crude benchmark closed above $80 per barrel on Thursday, nearly $20 per barrel lower than its peak in September. Earlier this week, concerns about demand and a decrease in war risk premiums triggered a sell-off.
There is a macroeconomic headwind affecting the market today, "said John Kilduff, a partner at Again Capital LLC.
Jim Burkhard, Vice President of Global Commodity Insight and Head of Oil Market Research at S&P, said that market fundamentals dominated traders' sentiment for most of Thursday as concerns about supply disruptions in the Middle East eased. The Israeli-Palestinian conflict has indeed exacerbated volatility and brought additional risks, but it has not affected potential oil market fundamentals, "Burkhard said." Oil prices have been consistently below the levels of late September. Currently, strong oil market fundamentals have overwhelmed any concerns
Price Futures Group analyst Phil Flynn said Thursday's gains indicate that the market is repositioning its fundamental supply and demand issues
Data from China and the United States on Thursday showed that crude oil demand is decreasing. According to sources quoting data from the American Petroleum Institute, US crude oil inventories increased by 11.9 million barrels in the week ending November 3rd. If this news is confirmed, it will be the largest weekly increase since February. However, the US Energy Information Administration (EIA) has postponed the release of weekly oil inventory data to November 15th for system upgrades.
According to data from the US Energy Information Agency (EIA), as of August, US crude oil production reached a record high, exceeding 404 million barrels. This broke the record of 402 million barrels of production set by the United States in December 2019.
Both OPEC and the International Energy Agency (IEA) will express their views on the fundamentals of oil demand and supply next week. OPEC will hold a meeting at the end of this month to discuss production policies for 2024.
Helima Croft, Global Commodity Strategy Director at Royal Bank of Canada, stated that given market concerns about oil demand and broader macro prospects, the possibility of Saudi Arabia unilaterally extending its 1 million barrels per day production reduction policy until the first quarter of 2024 is certain to increase. There is no indication that the Saudi Minister of Energy is preparing to abandon production cuts at this stage and return to the strategy of "maximizing market share". The relevant question may be whether he will consider extending the production reduction again if the current trend continues. The US government's stance on imposing sanctions on Iran's oil exports may be a key consideration.
Concerns about the global economic slowdown and declining demand for crude oil mean that the bullish guarantee of the Organization of Petroleum Countries has been largely ignored.
Haitham Al Ghais stated at the crude oil conference held in London that the United States has performed well, while Europe is in trouble. He said, "When we talk about demand and our prospects, perhaps from the short to medium term, despite all the challenges and pressures, we still see healthy global economic growth
UBS economists predict that after experiencing recent weakness, oil prices will rise. They said, "Despite the recent decline, there is still room for oil to rise; with global demand still growing and supply tight, we expect oil prices to rebound to between $90 and $100 per barrel. Despite weak US official forecasts, global crude oil consumption still receives good support. Major oil producers still maintain production discipline, leading to tight supply
Hedge fund manager Pierre Andurand stated that the better than expected crude oil supply was the trigger for the recent decline in crude oil prices. He said, "Compared to previous years, supply disruptions are much less, and production from Iran and the United States is higher than expected." He said, partly because exports from the OPEC+alliance have rebounded from extremely low levels in August. But he added that since shipments in September and October usually increase, an increase in exports does not mean that the organization has not complied with production quotas. He said that to achieve a "substantial structural increase" in oil prices, inventory needs to continue to decrease, similar to the situation of over 1.5 million barrels per day in July and August.
Crude oil QDII is currently at a high premium, and fund companies are indicating risks. Due to the impact of international oil price adjustments, several crude oil themed QDII net worth have significantly retreated recently. However, due to the popularity of the secondary market, some crude oil QDII shows a higher premium. Recently, E Fund announced that the trading prices of its A-class RMB shares in the secondary market of E Fund's crude oil fund fluctuate significantly, and the prices are significantly higher than the net value of the fund shares. Investors must be vigilant about investment risks. For the high premium of crude oil QDII, some industry insiders have stated that the high premium rate has overdrawn the expected rise of oil and gas QDII funds, and investors who buy at a high level may bear investment risks. Oil and gas QDII has high volatility characteristics, and its price trend often follows the fluctuation of supply and demand structure and market sentiment. Investors can consider it as part of asset allocation and avoid blindly pursuing high prices.
Technical analysis of crude oil: After breaking through the previous low level of combined emission support, the crude oil daily line broke out of inertia and continued to maintain a weak downward trend on the daily line. At present, the K-line on the 4-hour level is basically following the short-term moving average and maintaining a good downward trend of volatility. The hourly level is gradually stabilizing and the technical form is starting to recover slightly. There may also be a certain degree of rebound and recovery on the short-term trend. However, the overall weak technical form has not changed temporarily. From the daily chart level, crude oil prices have rebounded twice in late October but have continued to decline, ultimately forming a downward trend. The oil price has reached the August low of 77.80, and the current bearish performance is strong. Pay attention to whether there is a significant rebound at the end of this week. If the medium-term trend of crude oil continues to be weak, it will remain downward and retreat towards 70. The short-term trend of crude oil (1H) has undergone a weak adjustment, continuing to hit new highs in the downward trend, and the rebound rhythm has no resistance to the downward trend. The medium to short term trend of crude oil is consistently downward, and the bearish outlook remains unchanged for the day.
The upper short-term focus is on the 77.8-78.0 front line resistance, while the lower short-term focus is on the 73.0-73.3 front line support.
