Last week, international gold prices rose nearly $100, reaching a high of $1933 per ounce, mainly due to geopolitical tensions boosting the safe-haven demand for gold and market expectations that US interest rates may have peaked.
Specifically, last Wednesday, US core CPI inflation data slowed down. However, there is a significant divergence within the Federal Reserve on whether to continue raising interest rates. The latest reports from mainstream Wall Street institutions suggest that the possibility of a shutdown in November due to fiscal debt disputes is very high, and the new risk of debt default may have adverse consequences for 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 been reduced due to soaring US bond yields, and they expect a potential pause in rate hikes in November, but the high rate environment may persist. In addition, the US economy faces many risks in the fourth quarter, including the strike by the automobile union, the risk of a government shutdown, and student loan interest rate repayments, which may lead to a significant slowdown in economic growth.
Meanwhile, the escalation of geopolitical risks will have a significant impact on the global economy. As the geopolitical situation is related to core issues such as international energy supply, it cannot be ruled out that it will have a chain reaction on global inflation, the monetary policies of developed economies, bond markets, gold markets, and exchange rate markets.
In the medium to long term, the Federal Reserve’s tightening policy is constantly intensifying the global sentiment towards de-dollarization. The repeated debt ceiling crises and credit rating downgrades in the United States 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. In addition, the release of US retail sales for September and the statements of Federal Reserve Chairman Powell and other officials regarding inflation and rate hike expectations will also have some influence on gold prices this 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 it breaks through effectively, the upside target is around the $1950-1960 per ounce resistance range; on the downside, the support level to watch is the $1885-1900 per ounce range.