On Wednesday (November 22), spot gold surged on Tuesday and broke through the key resistance level of $2000 per ounce before retreating. The widening decline during the US period indicates the possibility of further decline, although the current pace of decline is gradual. With weak US economic data and expectations that the Federal Reserve will stop raising interest rates, this yellow precious metal still shows potential bullish potential.
Spot gold closed 0.44% lower at $1989.63 per ounce.
International precious metal futures generally closed lower, with COMEX gold futures closing 0.5% lower at $1991.5 per ounce, and COMEX silver futures closing 0.79% lower at $23.68 per ounce.
Market News Analysis
The spot gold price experienced significant fluctuations, briefly breaking the important threshold of $2000 per ounce before turning back. The spot gold price initially rose to $2006.43 per ounce, but this trend was short-lived as investor sentiment changed due to recent US economic data.
The dollar index soared, while the yield of US treasury bond bonds soared again. The yield of 10-year treasury bond briefly rebounded to 4.445%, and then fell back to 4.42%. These changes in returns will squeeze the upward space of gold prices.
Key indicators leading to changes in market sentiment also include a report of a decrease in the number of people applying for unemployment benefits, which hit a five week low of 209000 (lower than the expected 225000), indicating a tightening of the labor market. In addition, the fluctuation of US treasury bond bond yield usually affects the trend of non yield gold bars.
The University of Michigan's inflation expectations report adds to the situation, emphasizing that consumers expect an inflation rate of approximately 3.2% over the next five years, while American consumers still believe that the inflation outlook is high. This prediction is closely monitored as it may affect the Federal Reserve's interest rate decisions and reflect persistent concerns that inflation will become entrenched if expectations remain high.
Although gold prices have fallen below $1990 per ounce, approaching the 10 day moving average, and facing resistance of $2000 per ounce, there is still potential for an upward trend.
Investors will continue to closely monitor these economic indicators when evaluating the potential for future interest rate cuts by the Federal Reserve and measuring the overall health of the economy. The interaction between the strong job market, consumers' expectations of inflation and the trend of treasury bond bond yield will still be the key factors affecting gold prices in the near future.
The gold price also reflects investors' concerns about geopolitical risks. The strategist at ANZ Bank stated, 'The central bank's gold purchases have increased.',
Gold benefited from the positive factors of increased geopolitical risks, weak US dollar and lower yield of US treasury bond bonds. In response, investment flows are recovering. The central bank's gold purchase volume is strong and may reach 1050 tons by 2023. The demand for physical gold also looks healthy, with India's import volume increasing by 60% year-on-year in October
Strategists at Dao Ming Securities stated that the Federal Reserve has room for loose monetary policy. Weak data and mild inflation have prompted some people to believe that the Federal Reserve has room to loosen monetary policy. Currently, the market expects a probability of a rate cut in March to be about 30%, This essentially seems technical, and it is too early to believe that gold prices will continue to rise above $2000. We expect the trading range to be between $1979/ounce and $2009/ounce
Fundstrat analyst Mark Newton said that as gold prices rise to historic highs, this year's Thanksgiving may usher in a golden feast. Technically speaking, this is quite positive. I expect gold prices to have started to rebound to historical highs, "Newton said." Breaking through the 2009.41 USD/ounce range should lead to a range of 2060-2080 USD/ounce. "He wrote in the report," My technical target for gold is $2500 USD/ounce. Given the decline in real interest rates, cyclical rise, and ongoing geopolitical conflicts, buying precious metals long looks very attractive
Focus on financial data and events on Thursday (Beijing time)
① 16:15 Initial value of manufacturing PMI in November in France
② 16:30 Initial PMI of Manufacturing Industry in Germany in November
③ 17:00 Eurozone November Manufacturing PMI Initial Value
④ 17:30 UK Manufacturing PMI for November
⑤ 17:30 UK November Service Industry PMI
⑥ 20:30 European Central Bank releases minutes of its October monetary policy meeting
