On Tuesday (November 14), the weak US inflation report led to a sharp drop in the yield of US treasury bond bonds, which put pressure on the US dollar, the biggest drop in a year, and set a new low of 103.98 since September. The gold price rose to a new weekly high of 1970.77 US dollars/ounce.
Spot gold closed at $196.96 per ounce on Tuesday, up 0.86%.
COMEX's December gold futures settlement price rose+0.2% to close at $1966.7 per ounce.
Market News Analysis
The spot gold rose sharply, boosted by the sharp decline of the US dollar and the rise of treasury bond. The release of US inflation data triggered a strong reaction in the market, boosting the stock market and pushing the US dollar to its lowest level in months. The price of precious metals continued to rise, with spot gold reaching a high of 1970.91 US dollars per ounce, pulling up 27 US dollars from its daily low; Spot silver rose by 3% within the day.
The CPI data is significantly weaker than expected, which is quite favorable for precious metals, "said Daniel Ghali, commodity strategist at Dow Securities." We expect the economic data in the fourth quarter to deteriorate significantly, which should weaken the US dollar and support gold prices. "" In the next six months, we expect gold prices to rebound to $2100 per ounce
The US Consumer Price Index shows that the annual inflation rate has decreased from 3.7% in September to 3.2% in October, lower than the market expectation of 3.3%. The core inflation rate has also slowed from 4.1% to 4%, the lowest level since September 2021. This data weakens the expectation of the Federal Reserve raising interest rates before the end of the year and drives market expectations for the first rate cut since 2020. July to June 2024. The yield of US treasury bond bonds plummeted, benefiting gold, while the US dollar index also fell, hitting a monthly low.
More US inflation data, including Producer Price Index (PPI) and retail sales data, is scheduled to be released on Wednesday. If these reports show slowing inflation and weak consumer data, then the rise in gold may continue as the market strengthens expectations that the Federal Reserve has ended its tightening cycle.
Strategists at ANZ believe that the macroeconomic background of gold appears to be supportive, Recent US labor data shows a downward trend in employment and wages, approaching the level consistent with the Federal Reserve's overall inflation target of 2%. As the Fed's restrictive policies penetrate the economy, these trends are likely to continue. Therefore, we believe that US interest rates have peaked; US ISM services PMI data confirm that potential demand in the US is weakening. This is due to a decline in UST yields and a mild rise in the US dollar index Strong reasons are provided, which is conducive to the demand for gold investment
Carley Garner, co founder of DeCarley Trading Brokerage, stated that the US dollar and bond yields are likely to have peaked, weakening the important pressure on these two gold. So far, the US dollar has been quite high, with strong support above 105 points. However, Garner stated that she expects the US dollar index to weaken significantly in the near future. She said, "We must be very patient with our short dollar trading, but if interest rates have peaked and fallen, according to our chart, the dollar should also fall. Although the dollar has risen, it has not really changed. It has been hanging here for a long time, and the longer it stays, the heavier it becomes; at some point, this will help gold
Focus on financial data and events on Wednesday (Beijing time)
① 10:00 China's annual rate of total retail sales of consumer goods in October, and China's annual rate of industrial added value above designated size in October
② 14:30 France's third quarter ILO unemployment rate
③ 15:00 UK October CPI Monthly Rate, UK October Retail Price Index Monthly Rate
④ 15:45 French October CPI Monthly Rate
⑤ 18:00 Eurozone September Quarterly Adjusted Trade Account, Eurozone September Industrial Output Monthly Rate
⑥ 21:30 Canada September wholesale sales monthly rate, US October retail sales monthly rate, US October PPI annual and monthly rate, US November New York Fed manufacturing index
⑦ 23:00 US September Commercial Inventory Monthly Rate
⑧ 23:30 EIA crude oil inventory for the week from the United States to November 10, Cushing crude oil inventory for the week from the United States to November 10, and Strategic Petroleum Reserve inventory for the week from the United States to November 10
