Gold prices steadied after a sharp rise in the previous trading session as market confidence in a US interest rate cut next month strengthened.
Gold prices rose nearly 2% on Monday and are currently trading at around $4,135 per ounce. This rally was mainly driven by remarks from Federal Reserve Governor Christopher Waller, who suggested a rate cut in December due to the weakness in the US labor market. As gold does not pay interest, it typically benefits from lower interest rates.
The U.S. government shutdown lasted for six weeks, setting a new record high, which led to the delay of key data releases. As a result, the remarks of central bank officials have become one of the few clues for traders to predict the next interest rate move of the Federal Reserve. John Williams, president of the New York Fed, also said on Friday that he believes there is still room for rate cuts in the short term. Swap traders expect the Fed to cut rates by 25 basis points at its last meeting of the year with a probability of nearly 80%.
Luca Bindelli, head of investment strategy at Lombard Odier, said the market had reacted “violently” to such remarks recently. “This shows the market’s high sensitivity to the Fed’s comments in recent times,” he said.
Traders will be closely watching the delayed release of economic data this week. The retail sales and producer price index for September will be released on Tuesday, while the weekly initial jobless claims will be announced a day later. Any related comments from Federal Reserve officials could be among the last before the start of the communication blackout period on November 29.
Technical analysis:
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Gold: Yesterday, after the blue zone was broken through, the expected pullback did not occur. However, the gold price recaptured the 4100/4120 area, opening up further room for a rebound. Today, we will simultaneously pay attention to the direct signal of momentum breaking through and the stabilization signal at the support area around 4100/4090 after a pullback. For detailed positions, please consult the plugin.
(Gold 15-minute chart)
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Nasdaq: After the blue area we alerted through the plugin was broken through yesterday, the expected pullback did not occur. The reason is that a new demand area has formed around 24,500. Due to the narrow range of price movement within the day, we will first observe the performance of the momentum break. For detailed positions, please consult the plugin.
(NASDAQ 15-minute chart)
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Crude oil: After the price converged yesterday, it broke out upward and reached above 59. If the price drops back to test the breakout point around 58.30 today, we can try a long position. For detailed positions, please consult the plugin.
(Crude Oil 15-Minute Chart)
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Today’s key economic data and events to focus on:
23:30 US Dallas Fed Manufacturing Index for November
