On Wednesday (October 11th), gold prices hit a nearly two-week high on Wednesday, supported by a decline in US Treasury yields, while market focus shifted to key inflation data to seek further clues to US interest rates.
Spot gold closed at $1874.17 per ounce, up 0.73%.
COMEX December gold futures closed up nearly 0.64% at $1887.30 per ounce.
COMEX February gold futures rose 0.64% to close at $1906.80 per ounce.
Market News Analysis
Although the minutes of the Federal Reserve's September monetary policy meeting showed that the central bank is committed to maintaining a "longer and longer" monetary policy stance, the gold market remains steadily rising.
The Federal Reserve's tightening cycle is nearing its end, but meeting minutes show that committee members continue to support interest rate hikes until inflation falls back to the 2% target.
The minutes of the meeting stated: "All participants agree that policies should remain restrictive for a period of time until the committee is convinced that inflation continues to decline and its goals are achieved." "Some participants commented that as policy interest rates may reach or approach peak, the focus of monetary policy decision-making and communication should shift from how high policy interest rates are to how long policy interest rates are maintained at restrictive levels
The meeting minutes stated: "Many participants commented that although economic activity remains resilient and the labor market remains strong, there are still downside risks to economic activity and upside risks to unemployment rates." "Participants generally pointed out that balancing the risks of excessive tightening and insufficient tightening is crucial
Andrew Hunter, Deputy Chief Economist of Capitol Macro in the United States, said he expects the Federal Reserve's tightening cycle to have come to an end, This week, several officials expressed that rising yields may reduce the need for further interest rate hikes. We believe that the next step by the Federal Reserve is increasingly likely to be a rate cut. We expect this to occur in the first half of next year, and with the rapid rise in interest rates, the next step by the Federal Reserve will become increasingly likely. Falling inflation and weak economic growth have prompted officials to cut interest rates by a total of 200 basis points by the end of 2024
After the release of the minutes of the Federal Reserve meeting, gold prices were not suppressed.
Meanwhile, as investors remain concerned about the Israeli-Palestinian conflict, it seems that it is far from over and continues to have significant ripples and impacts throughout the financial market. Undoubtedly, this war will continue to have an impact on gold prices, with a resurgence of safe haven demand and continued good support for the gold market.
Meanwhile, Krishan GoPaul, senior analyst at the World Gold Council, stated that although the final data from the International Monetary Fund has not yet been released, early returns on gold purchases by central banks indicate that September's purchases remained strong as usual. The strong demand for gold by central banks in various countries has successfully maintained the stability of gold prices.
People's expectation that US interest rates have peaked is growing, leading to the decline of US treasury bond bond yields. As the peak yield of treasury bond has passed, interest free assets, including gold and silver, have become popular again. Summary of institutional comments
(1) Analysts at Investing said, "People still want a serious and tangible alternative to the US dollar, and they don't mind paying the price for it
(2) Kim Wyckoff, Senior Analyst at Kitco Metals, said that the dovish comments from Federal Reserve officials about the possibility of the Fed suspending tightening policies, as well as the turmoil in the Middle East, are supporting the gold market.
(3) Nick Timiraos, the 'Federal Reserve's mouthpiece', wrote that the minutes of the September meeting of the Federal Reserve showed that when Federal Reserve officials decided last month to keep the benchmark policy interest rate unchanged, there were disagreements on whether another rate hike was needed this year. Most participants believe that further rate hikes at future meetings may be appropriate, while some believe that further rate hikes may not be necessary. The rise in the yield of long-term US treasury bond bonds since August accelerated after the meeting last month. If long-term treasury bond bond yields continue to rise, Fed officials may not need to raise interest rates again this year. [Focus on financial data and events on Thursday (Beijing time)] ① Pending OPEC+release of monthly crude oil market report
② 09:30 Bank of Japan member Asahi Noguchi delivers a speech
③ 14:00 UK August Three Month GDP Monthly Rate, UK August Industrial Output Monthly Rate, UK August Manufacturing Output Monthly Rate, UK August Quarterly Adjusted Commodity Trade Account
④ 16:00 IEA releases monthly crude oil market report
⑤ 19:30 European Central Bank releases minutes of its September monetary policy meeting
⑥ 20:30 US September non quarter adjusted CPI annual rate, US September quarter adjusted CPI monthly rate, US September non quarter adjusted core CPI annual rate, US September core CPI monthly rate, US initial claims for unemployment benefits for the week ending October 7th
⑦ 22:30 EIA crude oil inventory series data for the week from the United States to October 6th
⑧ Pending G7 Finance Ministers' Meeting and Release of September Monetary Policy Meeting Minutes by the European Central Bank
⑨ Speech by Boston Fed Chairman Collins at 04:00 the next day
