On Thursday (October 24th), spot gold in the Asian market fluctuated narrowly, currently trading around $2720.53 per ounce. Gold prices fell more than 1% to close at $2715.33/oz after hitting a record high on Wednesday. The strong US dollar and the rising yield of US treasury bond bonds offset the support from the demand for safe haven related to the US election on November 5 and the Middle East war.

Spot gold once hit a record high of $2758.33 during trading on Wednesday. After rising and falling, the daily candlestick formed a bearish top signal, and MACD also issued a top divergence signal. The KDJ high-level dead cross operation requires caution against the risk of gold prices hitting the top and the possibility of future market downturns.

However, due to the ongoing conflict in the Middle East and high uncertainty in the US presidential election, short-term buying and safe haven buying are expected to support gold prices, which may limit the downward space of gold prices.

Gold is considered a tool for hedging against political and economic uncertainty, and has risen by over 31% this year, hitting historic highs repeatedly. The reason is that the Federal Reserve's interest rate cut last month, coupled with safe haven demand, has sparked a perfect storm for precious metals.

Bob Haberkorn, Senior Market Strategist at RJO Futures, said, 'There has been some profit taking and US Treasury yields are also rising. Considering the direction of yields, it is difficult for gold to further rise.'.

However, Haberkorn added that gold may reach a level of $2800 per ounce this weekend, driven by safe haven demand.

The US dollar index rose 0.4%, approaching a three-month high, making gold less attractive to holders of other currencies, while US bond yields once again hit a three-month high.

The US presidential election has gradually become the focus of market attention.

According to a Reuters/Ipsos poll, with less than two weeks until the US presidential election, Vice President Kamala Harris leads former Republican President Trump by a narrow margin of 46% to 43% in support.

On this trading day, October PMI data for European and American countries will be released, and investors need to pay attention. In addition, it is important to focus on changes in the number of initial jobless claims in the United States. Continue to pay attention to the geopolitical situation and relevant news about the US election.

Federal Reserve's Beige Book: US businesses report stable economy but declining profit margins, concerned about election uncertainty

From September to early October, there was almost no change in US economic activity, with a slight increase in corporate recruitment, continuing the recent trend, which strengthened expectations that the Federal Reserve would choose a smaller 25 basis point rate cut within two weeks.

The latest survey by the Federal Reserve on the health of the economy also shows that inflationary pressures continue to ease, and input prices are generally rising faster than sales prices, weakening corporate profit margins.

Before the November 5th US presidential election, the economy, especially inflation, remains a key concern for voters.

The Federal Reserve stated in its "Beige Book" survey on Wednesday that "overall, economic activity in almost all regions has not changed since early September, but two regions have reported moderate growth." The survey surveyed business contacts of 12 regional banks and ended on October 11th. Despite increased uncertainty, contacts are slightly more optimistic about the long-term outlook

Amidst growing concerns about the labor market, the Federal Reserve launched an easing cycle last month, significantly lowering its policy rate by half a percentage point to the 4.75% -5.00% range. The Federal Reserve will raise interest rates by a total of 525 basis points in 2022 and 2023 to curb high inflation.

Subsequently, a series of stronger than expected consumer spending, employment growth, and inflation economic data led investors to reduce their bets on the speed and magnitude of interest rate cuts.

A resilient economy is supported by stable income growth and sufficient household savings. Although the momentum of the labor market has slowed down, the level of layoffs is still at a historical low, supporting wage increases.

In September, employment growth in the United States reached its largest increase in six months, with the unemployment rate dropping to 4.1%, while retail sales steadily increased last month.

The stability of the labor market has been reflected in the latest survey, with more regions reporting small to moderate growth compared to previous surveys.

There is almost no indication that the situation will completely deteriorate, and layoffs are still limited. The San Francisco Federal Reserve pointed out that some employers have started recruiting for vacant positions that have been on hold for the past year, and wages in various regions of the Federal Reserve continue to rise at a moderate to moderate pace overall.

Investors currently expect the Federal Reserve to lower interest rates by a quarter of a percentage point at its policy meeting on November 6-7, and to cut rates by the same amount again in December.

Many contacts across the country cited the decrease in borrowing costs and the expectation of further interest rate cuts in the future as reasons for optimism.

But uncertainty surrounding elections, inflation prospects, and interest rate trends continues to affect many regions of the United States. The New York Federal Reserve said, "Due to the uncertainty of the presidential election, companies are still hesitant in recruitment

The Federal Reserve's survey shows that input prices have generally risen moderately. In multiple regions, the increase in input prices is faster than the sales price, which has suppressed the company's profits. The report states that the pressure of rising insurance and healthcare costs is particularly severe. (End)

In September, the sales volume of existing homes in the United States hit a 14 year low, and housing prices were the highest in the same period of previous years

The sales of existing homes in the United States fell to the lowest level in 14 years in September, dragged down by rising mortgage rates and housing prices.

Existing home sales have declined for the second consecutive month, reinforcing economists' view that the decline in residential investment, including housing construction, intensified in the third quarter. Under the impact of the rebound in mortgage interest rates in the spring, the real estate market has been struggling to rebound.

Although the supply has improved, entry-level housing is still scarce in most parts of the United States, making housing prices unaffordable for most first-time homebuyers.

More interest rate cuts and more choices are needed to bring home buyers back to the market, "said Jennifer Lee, senior economist at BMO Capital Markets

The National Association of Realtors (NAR) announced on Wednesday that the sales volume of existing homes decreased by 1.0% last month, with a seasonally adjusted annual rate of 3.84 million households, the lowest level since October 2010. Economists surveyed by Reuters previously predicted that the annual sales rate of existing homes would remain unchanged at 3.86 million households.

The sales volume may reflect a contract signed one or two months ago, when mortgage interest rates were quite high.

After the Federal Reserve began cutting interest rates last month, mortgage rates initially fell, but have risen again in the past three weeks due to robust economic data, including retail sales, forcing traders to abandon their expectations of another 50 basis point rate cut next month.

The popular 30-year fixed mortgage interest rate averaged 6.44% last week. According to data from mortgage financing institution Freddie Mac, although this interest rate is higher than 6.08% at the end of September, it is much lower than 7.63% a year ago.

Last month's housing inventory increased by 1.5% to 1.39 million households, the highest value since October 2020. The supply has surged by 23.0% compared to a year ago. Nevertheless, the supply is still lower than 1.8 million households before the COVID-19 epidemic.

Despite the continuous increase in supply, the median price of existing homes in September still increased by 3.0% compared to a year ago, reaching $404500, the highest in September in history.

According to the sales rate in September, it will take 4.3 months to digest the existing housing inventory, which is the highest level since May 2020 and higher than the 3.4 months in the same period last year. The supply of four to seven months is considered a healthy balance between supply and demand.

The US dollar continues its upward trend, rising to a near three-month high

The US dollar index continued its upward trend on Wednesday, rising for the 16th day in 18 trading days, and the weekly line is bound to rise for the fourth consecutive week. The intraday peak hit 104.57, a new high since July 30, and it closed at 104.42. A series of positive economic data prompted the market to lower its expectations on the extent and speed of interest rate cuts by the Federal Reserve, driving up the yield of US treasury bond bonds.

The yield of US 10-year treasury bond bonds rose 3.4 basis points to 4.24% on Wednesday, after hitting a three-month high of 4.26%. After falling for five consecutive months, the yield of 10-year treasury bond has risen about 40 basis points so far in October.

Investors also adjusted their positions before the US presidential election on November 5.

George Vessey, Chief Foreign Exchange Strategist at Convera, said, "We have moved from the first phase to the second phase, where the rebound in the first phase was related to the US economy and strong data released over the past month... while the second phase may be related to politics. However, in the short term, the tendency for the US dollar to strengthen may be more of a hedge against the possibility of Trump winning, rather than interest rate themes. Interest rate themes can be said to be exaggerated, but despite this, you will still see a sharp rise in yields

Recent statements from Federal Reserve decision-makers suggest that the Fed will adopt a gradual approach to lowering interest rates. And due to the strong economy, investors believe that the Federal Reserve may not be so dovish.

According to the CME FedWatch Tool, the market expects a probability of 88.9% for the Federal Reserve to cut interest rates by 25 basis points at its November meeting, and a probability of 11.1% to keep rates unchanged. A month ago, the market fully digested the expectation that the Federal Reserve would cut interest rates by at least 25 basis points, and believed that the possibility of a 50 basis point rate cut was 53%.

The upcoming US presidential election also continues to drive the trend of the foreign exchange market. In recent days, the market's expectations for the Republican presidential candidate and former President Trump's victory have been increasing, which may lead to policies such as tariffs that drive up inflation.

The yield of US treasury bond bonds rose sharply this week, and the yield of 10-year US treasury bonds has exceeded the key technical level, including the 200 day moving average and the 50% Fibonacci retracement of the decline from April to September.

The market is concerned about the next president and spending, whether Harris or Trump is elected, "said Tom di Galoma, head of fixed income trading at Curvature Securities

Part of the reason for the higher yield this week is the increased likelihood of Trump winning the US presidential election, as policies including tariffs and cracking down on illegal immigration are believed to trigger higher inflation.

According to the gambling website Polymarket, the probability of Trump winning is 64%, and the probability of Harris winning is 36%.

Before the election results are clear, many investors are generally hesitant to buy bonds, and the fiscal outlook also depends on whether any party can gain a majority in Congress.

Dan Mulholland, head of interest rate sales and trading at Crews&Associates, said, "There seems to be a bit of a buyer strike before the election, and I expect a lot of money to be invested in the market at that time." He said, "With that comes a lot of strong data, so this is a reflection on the Fed's final interest rate, which is what level our final interest rate will be

According to the FedWatch tool from Zhishang Institute, the current market believes that the probability of the Federal Reserve cutting interest rates by 25 basis points at both meetings in November and December is 67.1%, the probability of only cutting interest rates at one meeting is 30.2%, and the probability of the Federal Reserve maintaining interest rate stability before the end of the year is 2.7%.

There isn't much US economic data this week, and investors will be waiting for key data to be released next week, including the October employment report released on November 1st, to find further clues about the Fed's policies.

European Central Bank President Lagarde: Interest rate cuts need to be cautious, respond to data

European Central Bank President Christine Lagarde said on Wednesday that the ECB needs to be cautious when deciding to further cut interest rates and make judgments based on upcoming data.

After numerous policy makers warned that the European Central Bank's inflation target could fall below 2%, traders have increased their bets on faster and greater interest rate cuts by the ECB - a significant shift in tone after two years of efforts to curb prices.

Lagarde did not directly comment on the interest rate path, but she seems to have poured cold water on market speculation.

We need to be cautious because the upcoming data will tell us about the economic situation, inflation situation, and potential inflation situation, "she said at an event in Washington." Our decisions will have a judgmental aspect, but we do have to act with caution

During another event at the International Monetary Fund/World Bank annual meeting in Washington, Philip Lane, Chief Economist of the European Central Bank, said that the recent relatively weak economic data in the eurozone has raised questions about its prospects, but the ECB still expects the eurozone economic recovery to continue.

The European Central Bank lowered its key interest rate by 25 basis points to 3.25% last week, marking the third rate cut this year. Decision makers are currently discussing to what extent interest rates may need to be lowered and how to communicate their plans to investors.

Portuguese Central Bank President Mario Centeno has hinted that the bank may significantly cut interest rates by 50 basis points at its next meeting on December 12th.

He said, "We need to pay attention to the upcoming data and the data trends we have been observing. 50 basis points is definitely worth considering because we still rely on the data, and the data we have obtained also points in this direction

Even former hawkish figure and Dutch central bank governor Klaas Knot has stated that the European Central Bank can "continue to cut interest rates until it reaches a neutral range," which economists believe is around 2.0-2.5%.

The market expects the European Central Bank to cut interest rates by at least 25 basis points on December 12th, and may even cut interest rates by 50 basis points. By June next year, interest rates will drop to 2.0%.

Israel and Hizbullah exchanged fierce fire, and Antony Blinken visited the Middle East again to promote the peace process

On the occasion of US Secretary of State Antony Blinken's visit to the Middle East on Wednesday to promote the suspension of the war between Gaza and Lebanon, Israel launched a fierce attack on the southern suburbs of Beirut, and Hizbullah also said that it was the first time to launch precision guided missiles against Israeli targets.

Shortly after the Israeli military spokesperson issued evacuation warnings to the surrounding areas of Beirut, Israel's attacks on the outskirts of Beirut erupted into thick columns of fire in the night sky.

Pro Iranian Broadcasting Company Al Mayadeen stated that another attack hit a nearby office without any warning. The radio station stated that the office has been empty since the conflict began. The Lebanese Ministry of Health said that one person died and five others were injured, including a child.

Iran backed Hezbollah issued a statement late on Wednesday stating that it has escalated its attacks on Israel, using "precision missiles" for the first time and launching a new type of drone at Israeli targets, but did not provide further details.

Hezbollah later stated that it had targeted an Israeli military factory in the suburbs of Tel Aviv. As Hezbollah issued its statement, air raid sirens sounded in Tel Aviv and neighboring cities.

The Israeli military confirmed that four missiles were launched from Lebanon, two were intercepted, one landed in an open area, and one was confirmed to have landed in the area. There is currently no indication that any defense facilities around Tel Aviv have been hit.

As the war intensifies, Washington is making its final major effort for peace between Israel and Hezbollah and Hamas before the November 5th US election - a campaign that could change US policy.

Washington calls on Israel to take more measures to help the people of Gaza. US Defense Secretary Austin stated that if the humanitarian situation in Gaza is not resolved, there may be more rebel forces emerging. Israel denies obstructing the provision of aid to the war zone.

Antony Blinken regularly visited the Middle East during the war, which was his first visit after Israel killed Hamas leader Yahya Sinwar.

Due to the expectation that Israel will retaliate against Iran's missile attack on October 1st, Washington hopes to prevent the conflict from escalating. Antony Blinken said that Israel's retaliation should not lead to further escalation of the conflict.

Antony Blinken met with Israeli officials, including Prime Minister Netanyahu, and then went to Saudi Arabia to meet with Crown Prince Mohammed bin Salman. The US State Department stated that they have discussed efforts to end the Gaza and Lebanon wars.

In addition, when arriving in Lebanon to attend talks on ending hostilities, German Foreign Minister Belberg stated that providing weapons to Israel is a dilemma: "On the one hand, Israel is under attack every day, and not supporting it means that its people are not protected... On the other hand, Germany also has a responsibility to defend international humanitarian law

Antony Blinken said that now is the time for Israel to turn its military victory into a "lasting strategic success", take the hostages home, and end the conflict with a clear post-war plan.

Daily chart of spot gold