Gold Spikes Past 2680, Nears All-Time High?

On Wednesday (October 16th), gold prices experienced a slight increase, once breaking through $2,680, less than $5 away from the historical high, while the US dollar remained strong. Market participants are awaiting further US economic data to determine the number of interest rate cuts the Federal Reserve may implement in the short term.

As of press time, spot gold rose by 0.6% to $2,680, reaching a high of $2,681, less than $5 away from the historical peak set last month. The trading day saw an increase of over $15, with intraday volatility exceeding $20.

The US dollar remained stable at high levels, continuing the upward trend of recent weeks, as traders anticipated a moderate interest rate cut by the Federal Reserve.

Advertisement

The yield on the US 10-year Treasury bond fell for the third consecutive trading day, making non-yielding gold more attractive to investors.

ANZ commodity strategist Soni Kumari stated: "The transformative factor for gold prices is the easing of US monetary policy, as it lays the foundation for investment demand."

She also noted, "Uncertainty surrounding the US election and geopolitical tensions will also support gold prices in the future."

Investors are looking forward to the release of US retail sales, industrial production, and weekly unemployment benefit claims data on Thursday to gain new clues about the Federal Reserve's monetary easing cycle.

Traders currently believe there is a 92% chance that the Federal Reserve will cut interest rates by 25 basis points in its next policy decision on November 7th, with an 8% chance of no change. A month ago, traders thought there was more than a 29% chance that the Federal Reserve would significantly cut rates by 50 basis points.

Market pricing still strongly favors a total easing of 50 basis points this year, but central bank officials' overnight comments tend to be hawkish. San Francisco Federal Reserve President Mary Daly stated that as long as the data meets expectations, the Federal Reserve will continue to cut interest rates this year. Atlanta Federal Reserve President Raphael Bostic, on the other hand, stated that he only expected one more 25 basis point rate cut this year when he updated his forecast last month.

In addition, Israeli Prime Minister Benjamin Netanyahu stated that he told French President Emmanuel Macron that he would not agree to any ceasefire agreement that fails to prevent Hezbollah from rearming.According to reports, a source with knowledge of the situation stated that Israel's plan to retaliate against Iran's attack on October 1st is ready, but no further information was provided.

Iran's top diplomat told United Nations Secretary-General Antonio Guterres that if Israel attacks the Islamic Republic of Iran in retaliation for the missile launch last week, Iran is prepared to make a "decisive and regrettable" response.

Representatives at the annual meeting of the London Bullion Market Association predicted that gold prices will rise to $2,941 and silver prices will rise to $45 in the next 12 months.