Gold trading reminder: Fed meeting notes limited impact on precious metals, long and short contention 2000 mark

On Tuesday, spot gold surged from below $1,980 an ounce to near the key resistance level of $2,000 an ounce, an uptrend that persisted even as share prices fell and the dollar stabilised.

Gold rallied on Tuesday as Treasury yields held steady. After touching $2,007 an ounce, gold prices retreated to around $2,000 an ounce. The overall trend remains skewed to the upside, supported by expectations that the Federal Reserve will no longer raise interest rates, weighing on the dollar and favoring dollar-denominated precious metals.

(Spot gold trend chart)

Spot gold closed at $1998.29 an ounce on Tuesday, up 1.04%.

COMEX December gold futures settled 1.08% higher at $2001.6 an ounce.

[Market News Analysis]

The precious metals move comes against a backdrop of global economic sentiment being influenced by a weaker dollar and speculation of a more dovish policy stance by the Federal Reserve. These expectations have driven the Nymex gold market. Further weighing on market dynamics are lower-than-expected US bond yields, which are now below the federal funds rate. This divergence has sparked talk of possible monetary easing in the near term.

However, Richmond Fed President Thomas Barkin also issued a warning, warning against underestimating the persistence of inflation, which may require persistently high interest rates.

On Tuesday, the Federal Reserve released meeting notes, which had little impact on gold prices. The meeting notes showed that all participants were almost in agreement. The Fed meeting notes showed that all participants agreed that policy decisions at each meeting will continue to be based on "a synthesis of all information." All Fed members agreed that interest rates will remain restrictive for some time and agreed to "proceed cautiously" on interest rates.

Economists at Commerzbank said the Fed meeting notes are unlikely to leave any significant impact on gold, "Now that fears of conflict in the Middle East have waned significantly, the outlook for U.S. interest rates has regained the upper hand over gold. Against this backdrop, the latest FOMC meeting notes, scheduled for release on Tuesday, are likely to generate interest. For many FOMC members, another rate hike has not been ruled out, a fact that may once again be reflected in the meeting notes. Still, since the meeting in early November, there are growing signs that the Fed may have peaked interest rates. After all, in addition to weak economic indicators, inflation fell more than expected in October. Therefore, any negative impact of meeting notes on prices should be limited. "

Precious metals prices have remained resilient since the Israeli-Palestinian conflict. According to economists at TD Securities, macro headwinds may be increasingly tilting against gold bears, "It's been more than a month since the Middle East war triggered a massive short squeeze in precious metals markets. The crude oil market has melted away, removing the war-related risk premium, but precious metals prices remain resilient (it's a bear trap!), defying the traditional strategy of declining risk premiums. Finally, it's time to come to the dark side. We now see the risk that a buying dry-up could quickly turn into selling activity. However, in the long run, macro headwinds may increasingly weigh on free shorts in gold, but there is also the potential for some tactical downside."

The yield on the benchmark 10-year US Treasury bond fell 1.17 basis points to 4.4081% due to growing concerns about an economic slowdown and a possible recession. During the session, it traded in the range of 4.4412% -4.3810%. After the release of the Federal Reserve's meeting notes, it hit a new high. The yield on the 2-year Treasury bond fell 3.00 basis points to 4.8808%. During the session, it traded in the range of 4.9172% -4.8574%. After the release of the meeting notes, it rebounded to above 4.9%. Limiting the room for the dollar to rise, which is conducive to the upward space of the gold price.

After the Federal Reserve released meeting notes, CME "Fed Watch" data showed that the probability of the Federal Reserve keeping interest rates unchanged in the range of 5.25% -5.50% in December is 94.8%, and the probability of raising interest rates by 25 basis points is 5.2%. The probability of keeping interest rates unchanged by February next year is 94.8% #Fed rate hike storm #, and the probability of a cumulative rate hike of 25 basis points is 5.2%. The probability of a cumulative rate cut of 25 basis points by March next year is 28.4%, the probability of maintaining interest rates unchanged is 67.9%, and the probability of a cumulative rate hike of 25 basis points is 3.6%.

[Wednesday focuses on financial data and events (Beijing time) ]

① 19:00 UK November CBI industrial order difference

② 20:30 British Chancellor of the Exchequer Hunt delivers the autumn budget report

③ 21:30 The number of initial jobless claims from the United States to November 18, and the monthly rate of durable goods orders in the United States in October

④ 23:00 The final value of the University of Michigan Consumer Confidence Index in November, and the expected one-year inflation rate in the United States in November

⑤ 23:30 EIA crude oil inventories in the week from the United States to November 17, EIA Cushing crude oil inventories in the week from the United States to November 17, and EIA strategic petroleum reserve inventories in the week from the United States to November 17

EIA natural gas inventories for the week from the United States to November 17 at 01:00 the next day

The next day at 02:00, the total number of oil rigs in the week from the United States to November 24