On Monday (November 6), spot gold maintained fluctuation in trading in the early Asian market. The strong U.S. economic data overall pressure on gold prices last week, and the market continues to discuss the prospects of the Federal Reserve's interest rate hike in December and next year, which is not good for gold prices. Gold prices are currently trading below $1,270, with spot gold falling 0.04% in the early trading to $1,269.54/oz; spot silver rose 0.12% in the early trading to $16.86/oz.
strong data boosted the prospect of FED rate hike
Although the US non-farm employment data released last Friday performed less than expected, this report still struggled to change the Fed's expectations of interest rate hikes in December, while other US data, the US ISM non-manufacturing PMI in October and factory orders in September performed very well, further supporting this rate hike expectations.
In addition, the US GDP and inflation data released last month directly pointed to the strong US economy, which shows that the Federal Reserve is likely to raise interest rates further.
According to the FedWatch tool of CME Group, the Chicago Mercantile Exchange Group, the market still expects the bank to raise interest rates again in December as high as 98%.
Analysts believe that from the perspective of overall economic performance, the market sees that the Federal Reserve is likely to raise interest rates in December and may raise interest rates three more next year. This is definitely the most optimistic compared to the market's expectations for the interest rate outlook for other major central banks. "For gold, none of these economic data provides the Fed with a reason not to raise interest rates next month, which has caused the U.S. two-year Treasury yield to climb to its highest level in 2017. With inflation still low and the interval between interest rates hikes shortened, the increase in real interest rates has made the attractiveness of safe-haven assets such as gold that do not provide interest income, rapidly declining." The performance of specific U.S. data shows that the U.S. non-farm employment report released earlier last Friday failed to meet economists' previous expectations, and the unemployment rate fell from 4.2% in the previous month to 4.1%, and the average hourly wage fell by 1 cent to $26.53.
Analysts pointed out that the non-farm report overall provides a basis for the Fed to further slow rate hikes next year after raising interest rates in December, but the prospects for interest rates are still pointing to the rise in the US dollar, so this puts pressure on gold prices.
data also shows that the US ISM non-manufacturing index in October was 60.1, a record high since August 2005, with an expected 58.5 and the previous value was 59.8. The monthly rate of factory orders in the United States in September was 1.4%, with an expected 1.2%, and the previous value was 1.2%.
analysis pointed out that the expansion rate of the US service industry in October hit a new high since August 2005, indicating that the US economy is accumulating momentum, as the service industry accounts for nearly 90% of the overall economy. Among them, the export sub-index also hit a 6-month high, indicating a rebound in overall global demand; the delivery index maintained a new high since November 2005, indicating an increase in delivery speed.
Other factors affecting gold prices
The good performance of global stock markets put pressure on gold prices. The US stock market performed very strongly last week. The stock market hit a new record high under the support of tax reform expectations.
The world's largest gold-backed listed trading fund SPDR Gold Trust The holdings continue to decline, which is not conducive to the gold price. Positions fell for two consecutive trading days last Thursday and Friday, down 3.55 tons last Thursday and 0.29 tons last Friday.
In terms of physical buying, the demand for physical goods from Indian and Chinese consumers has been weak recently, and Singapore's demand is stable, which is temporarily unfavorable to gold prices. But the peak wedding season in India is coming soon, and this is expected to provide some support for gold prices in the coming weeks.
Technically . Currently, the price in the hourly chart of gold prices is in a clear short position, and all technical indicators point to short positions. After the oscillation and consolidation, the gold price is still expected to fall further.
chart: Spot gold price hourly chart
Huitong Finance Yihuitong market software shows 11:14 Beijing time, spot gold was reported at $1269.00 per ounce.
