The international gold price rose nearly $100 last week, reaching a high of $1933 per ounce, which is a recovery from the previous two weeks’ decline. The main reasons for this increase were the geopolitical tensions boosting the demand for safe-haven assets such as gold, and market expectations of a possible peak in US interest rates.
Specifically, on Wednesday last week, the US September core Consumer Price Index (CPI) data showed a slowdown in inflation. However, there is significant internal dissent within the Federal Reserve regarding whether to continue raising interest rates. According to the latest report from major Wall Street institutions, there is a high possibility of a government shutdown in November due to disagreements over fiscal debt spending, and the risks of a new debt default could have adverse consequences on the US economy, finance, and national credit. At the same time, several Federal Reserve officials have recently stated that the necessity of raising interest rates has decreased due to the soaring US bond rates, and it is expected that there may be a continuation of the pause in rate hikes in November, but the high-interest rate environment will be more persistent. In addition, the US economy in the fourth quarter is facing various risks including automobile union strikes, government shutdown risks, and student loan interest rate repayments, which could significantly slow down economic growth.
Meanwhile, the escalation of international geopolitical risks will have a significant impact on the global economy. Given that geopolitical tensions are closely related to international energy supply and other core issues, it cannot be ruled out that this will have a chain reaction on global inflation, the monetary policies of developed economies, bond markets, gold markets, and currency markets.
In the medium to long term, the Federal Reserve’s current tightening policies are continuously intensifying global sentiment towards de-dollarization, and the repeated US debt ceiling crises and credit rating downgrades further accelerate the process of global de-dollarization.
Looking ahead to this week, market focus will continue to be on the impact of geopolitical tensions. Additionally, the announcement of the US September retail sales growth rate and the statements of Federal Reserve Chairman Powell and other officials regarding inflation and rate hike expectations will also have some influence on the gold trend for the week.
From a technical perspective, this week’s attention will be on the battle between bulls and bears around the $1935 per ounce level. If there is a successful breakthrough, the upside target will be the $1950-1960 per ounce resistance range, while the downside will focus on the $1885-1900 per ounce support range.