On Monday (October 28th) morning trading in the Asian market, spot gold opened lower by over $10, hitting a low of $2730.19 per ounce and currently trading around $2735.31 per ounce; Last Saturday, Israel retaliated against Iran, but the scope of the attack was relatively limited, including avoiding oil infrastructure, which increased people's hope for the prospect of easing the situation. In addition, the resumption of the Doha ceasefire negotiations has suppressed the safe haven demand for gold, putting pressure on the price of gold.

This week, we will receive heavyweight economic data such as the US third quarter GDP, US October PCE data, and US October non farm payroll report, which are expected to affect the market's expectations of the Fed's interest rate cut prospects, and thus affect the trend of gold prices. Investors need to pay close attention to this.

Gold prices rose slightly last Friday, recovering from a wave of profit taking, supported by tensions in the Middle East and unease over the US election; Spot gold rose 0.38% last Friday, at $2746.26 per ounce, slightly lower than the record of $2758.32 set last Wednesday, but rose 0.89% on the weekly chart, marking the third consecutive week of gains.

RJO Futures Senior Market Strategist Bob Haberkorn said last Friday that the market expects some things to happen between Israel and Iran over the weekend, which may trigger some safe haven buying before the weekend.

Due to the ongoing tensions in the Middle East and the 50 basis point interest rate cut by the Federal Reserve, which has boosted gold prices, non yield gold has risen by over 32% so far this year.

However, investors need to closely monitor changes in market risk aversion sentiment.

On the morning of the 26th local time, the Israeli Defense Forces issued a statement stating that they had completed their attack on Iran that day and achieved their predetermined goals. The statement stated that air force fighter jets attacked Iran's missile production plant, surface to air missile arrays, and other facilities, and all Israeli military fighter jets have safely returned to Israel.

The statement from Iran's air defense forces stated that Israel has launched attacks on several military centers in Tehran, Khuzestan, and Iram provinces. The air defense system successfully tracked and retaliated against Israel's "aggression", despite some locations suffering limited damage.

According to a senior US government official, "the direct exchange of fire between Israel and Iran should end here. According to the official, "the US side is aware of Israel's specific targets for striking Iran, but will not further elaborate; the US government has been cooperating with Israel in recent weeks and encouraging Israel to take targeted and proportionate response actions. The US stated that if Iran retaliates, it will defend Israel. The official also said, "The US has multiple direct and indirect communication channels with Iran, and Iran knows the US position on multiple issues. If Iran responds to Israel's attack, it will have consequences, and the US will continue to defend Israel.

Three insiders said that Israel sent a message to Iran warning it not to respond before retaliatory airstrikes. Israel's message is an attempt to limit the ongoing mutual attacks between the two sides and prevent broader escalation. The information from Israel was conveyed to Iran through several third parties. A source said that Israel had made it clear to Iran in advance which targets they would generally attack and which targets they would not attack. Two other sources said that Israel has warned Iran not to respond to the attack and emphasized that if Iran retaliates, Israel will launch another more serious attack, especially in the event of civilian casualties in Israel.

Analysts point out that there are two main factors why Israel's retaliation against Iran ended so quickly. Firstly, the US government has previously stated that it will not attack Iran's nuclear and oil facilities, and has demanded that Israel maintain a certain degree of restraint. Secondly, the US Secretary of State has just visited Israel and requested caution in Israel's military actions during the visit. From these two points of view, Israel did indeed carry out this retaliatory action within the framework drawn by the United States.

According to US media reports, US President Biden responded to Israel's earlier attack on Iran on Saturday local time. He expressed the hope that this attack would mark the end of the tense situation in the Middle East. It looks like they didn't hit anything except military targets. I hope this is the end, "Biden told reporters in Philadelphia. According to reports, Biden also stated that earlier on the 26th, he had received relevant briefings from intelligence agencies.

According to the assessment of two American researchers, commercial satellite imagery shows that Israel's airstrike on October 26th hit a building in Iran used for mixing solid fuel for ballistic missiles. The above judgment was made by David Albright, the head of the research team at the Institute for Science and International Security and a former United Nations weapons inspector. They separately stated that Israel attacked the Parchin military base near Tehran and also attacked Khojir, a large missile production base near Tehran. Previously, there were reports that Hogier's facilities were undergoing large-scale expansion. The Israeli attack may have seriously hindered Iran's ability to produce missiles on a large scale.

The Iranian military stated on the 26th that during Israel's attack on Tehran and other provinces of Iran on the 26th, only the Iranian radar system was damaged. The Iranian military also stated that the Iranian side prioritizes achieving a ceasefire in Gaza and Lebanon. According to reports, the General Staff of the Iranian Armed Forces stated in a statement read on the country's national television that "due to the timely deployment of our defense air forces, the damage caused by the (Israeli) attack was limited, with some radar systems damaged." The statement also stated that "a large number of missiles were intercepted and enemy planes were prevented from entering our airspace." The statement also stated that Israeli aircraft were obstructed and could only launch "a small number of long-range missiles carrying ultra light warheads" from the airspace of neighboring Iraq, which is patrolled by the US military, at a "long distance.

On October 27th, Iranian President Pezehezhian stated that Iran does not seek war, but will defend its national rights and respond appropriately to Israel's aggression. Iran also has the right to respond to Israel's attacks.

In addition, on October 27th local time, ceasefire negotiations in the Gaza Strip resumed in Doha, the capital of Qatar. Representatives from Qatar, Egypt, the United States, and Israel attended the talks. The Palestinian Islamic Resistance Movement (Hamas) did not send representatives to attend. It is reported that the Israeli delegation participating in this round of negotiations is led by David Bania, the Director of the Israeli Intelligence and Special Services Agency (Mossad). Representatives from Qatar, Egypt, and the United States are respectively Qatar's Prime Minister and Foreign Minister Mohammed, Egyptian Intelligence Director Hassan Mahmoud Rashad, and US Central Intelligence Agency Director Burns

It should be pointed out that the uncertainty surrounding the US presidential election has also boosted gold demand, as opinion polls show that the White House election remains tight. But the chances of Trump winning have increased, and the US dollar has risen for the fourth consecutive week. The 10-year US Treasury yield hit a three-month high on Wednesday, which has also made gold bulls wary.

The US dollar index rose 0.83% on Friday to close at 104.33, and hit 104.57 on Wednesday, a new high since July 30th. The data released last week suppressed the Federal Reserve's interest rate expectations, and investors are looking forward to the key employment report to be released this week.

The US Department of Commerce stated that the indicators reflecting corporate spending plans, excluding non defense durable goods orders for aircraft, increased by 0.5% month on month in September. Economists had previously predicted that this so-called core durable goods order would increase by 0.1%, and was confirmed to increase by 0.3% in August.

Another report from the University of Michigan shows that the US consumer confidence index rose from 70.1 in September to 70.5 in October, exceeding expectations of 69.0, while one-year inflation expectations fell from an initial value of 2.9% to 2.7%, but remained consistent with the final value in September.

Because a series of strong economic data calmed people's expectations on the scale and speed of the Federal Reserve's interest rate cut, which also pushed up the yield of US treasury bond bonds.

Investors are currently focusing on next week's government non farm payroll report for October, which may be affected by the Boeing strike and two hurricanes in the southeastern United States.

Karl Schamotta, Chief Market Strategist at Corpay in Toronto, said, "We have made a significant adjustment to our economic expectations for the United States, and this process seems to have been largely completed. The Federal Reserve's policy trajectory looks more reasonable, and the interest rate differential between the United States and other major economies is stabilizing.

The US dollar also benefits from the rising market expectations for the Republican candidate and former US President Trump's victory in next month's election, which may lead to policies such as tariffs to stimulate inflation.

According to the Chicago Mercantile Exchange's FedWatch tool, the market expects a 97.7% chance of the Federal Reserve cutting interest rates by 25 basis points at its November meeting, and a 2.3% chance of the Fed keeping rates unchanged. A month ago, the market expected a rate cut of at least 25 basis points, and the possibility of a 50 basis point rate cut was as high as 57.4%.

The yield on 10-year US Treasury bonds hit a three-month high on Wednesday, and traders expect the Fed to be less dovish due to robust economic data, including a much stronger than expected September employment report.

The October employment report released this Friday is the next major focus of the US economy. According to economists surveyed by Reuters, the report is expected to show an increase of 123000 jobs in October.

Stephen Gola, head of sales and trading of US treasury bond bonds of StoneX Group in New York, said that the market was very nervous and worried about another strong employment report. During the period from the release of the employment report to the election, I believe the report may bring pressure to the market

Gola also pointed out that October is usually a month when bonds are bearish.

The release of strong economic data means that "there is no sufficient reason for the yield of 10-year treasury bond bonds to jump low," said Padhraic Garvey, director of research in the Americas of ING in New York.

However, future weak employment data may lead to a reversal in yield trends and a decline, "Garvey said.

According to the FedWatch Tool from CME, traders have a 75% chance of the Federal Reserve cutting interest rates by 25 basis points at its November and December meetings.

The yield of 10-year treasury bond rose 2.4 basis points to 4.226% late Friday, hitting the highest 4.26% since July 26 last Wednesday. The yield is expected to record the largest single month basis point increase since April.

The gambling market shows that Republican candidate Trump won the US election on November 5th, and the Republican Party has a greater chance of winning a majority in both houses of Congress.

It is expected that whether Trump or the Democratic candidate, Vice President Harris, takes office in the White House, the budget deficit of the United States will further deteriorate, and the increase in government spending may lead to the issuance of more treasury bond.

Trump's tariffs and illegal immigration policies are also expected to fuel inflation.

In the long run, concerns about deficits and increased supply of treasury bond may put pressure on bonds.

I do feel that there is a sentiment in the market now, which is what to do with the deficit once the election results are announced? What are the plans? Because we cannot let it go, "Garvey said.

There is relatively little economic data for this trading day, but Europe has already entered winter time, and market trading hours and economic data release times will be delayed by one hour compared to summer time. Starting from Sunday, North America will also enter winter time, and investors need to adjust their time in advance.

On this trading day, investors need to continue to pay attention to the geopolitical situation and news related to the US election, and pay attention to the market's expected changes in the US third quarter GDP and non farm payroll data.

Daily chart of spot gold