On Wednesday (November 15th), gold prices faced selling pressure due to the slower than expected decline in US retail sales data for October. Spot gold retreated after hitting the weekly high of US $1975.22/ounce. The reason why it failed to hold above US $1970 was mainly due to the rebound of the US dollar and the rebound of the yield of US treasury bond bonds.
Spot gold closed 0.19% lower on Wednesday at $1959.25 per ounce.
COMEX December gold futures closed 0.11% lower at $1964.30 per ounce.
COMEX December silver futures rose 1.76% to close at $23.538 per ounce.
Market News Analysis
On Wednesday, spot gold rebounded after hitting a weekly high of $1975 per ounce. XAU/USD is difficult to hold above USD 1970/ounce, mainly due to the rebound of USD and US treasury bond bond yields.
In terms of US economic data, the Producer Price Index (PPI) fell by 0.5% in October, less than the expected growth of 0.1%. The annual growth rate has also decreased from 2.2% to 1.3%. In addition, the core PPI data was lower than expected. These data are consistent with the Consumer Price Index (CPI) data released on Tuesday, indicating that inflation is cooling down. Retail sales decreased by 0.1% in October, and a significant decline of 0.3% is expected.
The economic focus has strengthened the evidence of Tuesday driving the US dollar lower, although Wednesday's impact may be different, which may be due to a pullback. At present, risk appetite still exists, US bonds are strong, and the US dollar is still fragile, all of which may support the further rise of gold price.
David Meger, Director of Metal Trading at High Ridge Futures, said: "The results of CPI and PPI are positive as they continue to support gold prices, as expectations of inflation continuing to fall increase expectations that the Federal Reserve has already completed rate hikes
This Thursday, the United States will release a weekly report on unemployment claims, industrial production, and the Philadelphia Federal Reserve manufacturing index. If these data are positive, it may weaken the demand for treasury bond and lead to an increase in yields, which may bring pressure on gold prices.
Currently, the money market expects a 100% probability of the Federal Reserve raising interest rates in December, while investors are currently shifting their expectations towards when the Federal Reserve will start cutting rates.
Economists at Dao Ming Securities said, "Gold traders expect the Federal Reserve to shift towards doves by the end of 2023/early 2024, coupled with strong official sector purchases, which should continue to push gold prices above $2100 per ounce in 2024
Although gold is considered an inflation hedge, rising interest rates have weakened the attractiveness of unprofitable gold.
Tai Wong, an independent metal trader in New York, said, "With the support of yields, gold initially rose and then fell. I believe the outlook for (gold) assets will remain optimistic, but the trend will be more cautious
Focus on financial data and events on Thursday (Beijing time)
① 09:30 Monthly Report on Residential Prices in 70 Large and Medium sized Cities in China
② 21:30 Initial jobless claims for the week from November 11th in the United States, Philadelphia Federal Reserve manufacturing index for November, and monthly import price index rate for October in the United States
③ 22:15 Monthly rate of industrial output in the United States in October
④ 22:25 Federal Reserve Williams delivers a speech
⑤ 23:00 US November NAHB Real Estate Market Index
⑥ 23:30 EIA natural gas inventory for the week from the United States to November 10th
⑦ 23:35 Federal Reserve Governor Barr delivers a speech
