On Thursday (November 2nd), gold prices continued to rise on the basis of the previous day's rebound and gained some follow-up momentum on Thursday. The generally positive tone of the stock market is seen as a key factor that poses resistance to precious metals and requires caution from bulls.
Nevertheless, the decline in the yield of US treasury bond bonds, the general selling bias of the US dollar, and the bet that the Federal Reserve will not further raise interest rates may continue to be the driving force for the price of interest free gold. In addition, the risk of further escalation of the conflict between Israel and Hamas, as well as the trend of global economic conditions, support the prospect of further appreciation of safe haven gold.
Spot gold closed 0.15% at 1985. 77 US dollars per ounce.
COMEX December gold futures closed 0.30% higher at $1993.50 per ounce.
COMEX February gold futures closed 0.30% higher at 2013.90 US dollars per ounce.
Market News Analysis
The growth in the number of first-time applicants for unemployment benefits in the United States has exceeded expectations, and the US labor market seems to be losing some momentum. The US dollar is weak, and the gold market is showing a healthy trend.
On Thursday, the US Department of Labor stated that as of the week ending October 28th, the number of weekly jobless claims rose to 217000, an increase of 5000 from the previous week's revised 210000. The latest labor market data is slightly higher than expected. According to consensus predictions, economists expect the number of initial claims for unemployment benefits to remain around 210000.
The spot gold market continues to remain below $2000 per ounce; However, the initial response to the latest labor market data has slightly increased.
Not only is the number of first-time applicants for unemployment benefits constantly increasing, but laid-off workers also face some difficulties in finding new jobs. As of the week ending October 21st, the number of renewed claims for unemployment benefits that were delayed by one week increased to 1.818 million. The number of people applying for unemployment benefits has increased by 35000 compared to the revised level of the previous week.
Encouraged by the weakening yield of the US dollar and US treasury bond bonds, the hawkish tone of the Federal Reserve was lower than expected. Although the increase of gold was limited by the rise of risk appetite, gold still maintained an upward trend on Thursday.
Federal fund futures show that traders expect an 80% chance of a rate hike in December, with the Federal Reserve starting to cut rates in mid-2024.
The decline in US dollar and US bond yields due to this view has benefited gold. But most traders have turned to risk driven assets such as stocks, limiting any significant gains in gold. Under the prevailing risk appetite environment and the uncertainty of the Federal Reserve's future interest rate hike path, it is difficult for gold prices to take advantage of the opportunity for a slight intraday increase.
Although it is expected that gold will benefit from the prospect of no further interest rate hikes, any significant upside potential for gold remains questionable, and US interest rates may remain high for a longer period of time.
Powell also acknowledged that the Federal Reserve still has a long way to go before reaching its 2% inflation target, and had previously hinted that the bank's target interest rate would remain above 5% by at least the end of 2024.
Higher interest rates do not bode well for gold as they increase the opportunity cost of holding gold. Nevertheless, due to the outbreak of the Israeli-Palestinian conflict driving up safe haven demand, gold has continued to rise strongly since October.
According to the FedWatch tool of Chishang Exchange, the market currently believes that the probability of the Federal Reserve suspending interest rate hikes again in December is 80%.
Investors will also pay attention to the US non farm payrolls report released on Friday to further understand the Federal Reserve's policy path.
Focus on financial data and events on Friday (Beijing time)
① 15:00 German September quarter adjusted trade account
② 15:45 Monthly rate of industrial output in France in September
③ 17:30 UK October Service Industry PMI
④ 18:00 Eurozone September unemployment rate
⑤ 20:00 Federal Reserve Governor Barr delivers a speech
⑥ 20:30 Canada's October employment figures, US October unemployment rate, US October quarter adjusted non farm employment figures
⑦ 21:45 Markit Service Industry PMI Final Value for October in the United States
⑧ 22:00 US October ISM Non Manufacturing PMI
⑨ The next day at 00:45, the Federal Reserve's Kashkari delivered a speech
⑩ The total number of oil drilling operations for the week from 01:00 the next day to November 3rd in the United States
