Last Friday (October 28) in late U.S. market trading, spot gold closed at $1,643.90 an ounce, down $19.36 or 1.16% for the week, reaching a weekly high of $1,674.67 an ounce and a low of $1,637.90 an ounce.
Markets will be closely watching the Federal Reserve’s monetary policy meeting this week. With markets already pricing in the Fed’s fourth rate hike of 75 basis points on Wednesday, the main focus will be on whether the Fed will reveal a slowdown in the pace of rate hikes after its November meeting. Some data have already suggested that growth is slowing and a recession is looming, and some central banks, including the Bank of Canada, have turned to smaller rate hikes. Many institutions have raised the question “Has the most intense phase of the global monetary tightening cycle passed?”. If the pace of rate hikes by the Federal Reserve slows, it will be good for gold, which is why some analysts are starting to be bullish on gold.
Not everyone is convinced, however, that the Fed will be willing to ease its tightening efforts. More analysts believe the market is still likely to receive strong labor market data and a fiery November inflation report. Many analysts believe the Fed will not stop raising rates until it hits 5%. At its last meeting, Fed forecasts showed rates would climb 4.4% this year and 4.6% next year. After next week’s meeting, the Fed will raise interest rates by a cumulative 375 basis points this year, bringing the federal funds rate to 3.75%-4%.
“Unfortunately, the data are not heading in the right direction and we may need to see a significant month-on-month slowdown in core CPI…to give the Fed the confidence to slow the pace of tightening significantly,” ING chief international analyst Teacher James Knightley said. “At this stage, we are not confident that this will be the case at the December FOMC meeting, so we still have a good chance of raising rates for a fifth consecutive 75 basis points instead of the current 50 basis points.”
How the Fed will raise interest rates in the future may be able to see some clues from the interest rate meeting this week in November. Therefore, before the interest rate meeting this week, gold is expected to be under pressure.
On the technical level, the current trend of gold as a whole belongs to the range fluctuation at the bottom of the daily line, and the double bottom structure is formed on the daily line, and it seems that the downward trend has come to an end temporarily. The daily line was blocked and fell near 1667 on Friday, closing overcast, but 1638 did not fall below. If it breaks 1638 effectively this week, look below 1630 or even 1621. If the market stabilizes at 1638, first look at the vicinity of 1649-1653, if it stands firm at 1653, look directly at the daily resistance near 1662.
Bank of China Guangdong Branch Wang Gang
Personal views only, do not represent the views of the organization