At the beginning of the Asian market on Friday (November 1st), spot gold fluctuated narrowly and is currently trading around $2746.27 per ounce. Gold prices fell from historical highs on Thursday, partly due to the strong performance of data such as initial jobless claims in the United States, which suppressed expectations of interest rate cuts by the Federal Reserve. On the other hand, Israel and Hezbollah made "good progress" in ceasefire negotiations, suppressing risk aversion, and some bulls took profits in non farm payroll data and before the US election.

Spot gold closed down 1.56% on Thursday at $2743.80 per ounce, the largest daily decline since July 19th. The daily level formed a "swallowing bearish" top signal, and investors need to be wary of the risk of gold prices hitting the top. However, the gold price still rose 4.15% in October, marking the fourth consecutive monthly increase. Moreover, gold prices have shown top signals similar to "swallowing" bearish sentiment on October 23, September 27, and August 22, but they continue to rise and repeatedly break historical highs, so bears still need to be vigilant about the possibility of high-level volatility.

David Meger, head of metal trading at High Ridge Futures, said, "You will see further consolidation. We will have many significant news events next week. Tuesday is the US election, and Wednesday is the Federal Reserve meeting. So it's not surprising to see some traders taking profits

Public opinion polls show that former Republican President Trump and Democratic Vice President Harris are evenly matched in the highly anticipated White House race. But the market is betting that Trump has a greater chance of winning the presidency of the United States.

The data shows that the personal consumption expenditure (PCE) price index in the United States increased by 0.2% in September, compared to a 0.1% increase in August without correction. Economists previously predicted that the PCE price index would rise by 0.2%.

Investors are currently waiting for Friday's employment report and believe that there is a 90% chance of a 25 basis point interest rate cut in the United States next week, which is still positive for non yield gold in the medium to long term.

The Ministry of Labor is scheduled to release the October employment report at 20:30 on Friday, which is the last important economic data before next week's election. Economists predict that the Federal Reserve will ignore the employment report and cut interest rates by 25 basis points next Thursday.

A Reuters survey shows that after an increase of 254000 non farm jobs in September, there may be an increase of 113000 jobs this month. The unemployment rate is expected to remain unchanged at 4.1%.

In addition, after the non farm payroll data, at 22:00 Beijing time, the US October ISM Manufacturing PMI will also be released, and investors need to pay close attention.

Additionally, it should be noted that there are reports that Iran is preparing to launch retaliatory strikes against Israel from within Iraq in the coming days. The gold price is still supported by bargain hunting and safe haven buying.

It should also be noted that starting from this Sunday (November 3rd), when winter time begins in North America, the trading hours and economic data release time of the US and Canadian financial markets will be delayed by one hour compared to summer time. Investors need to adjust events accordingly.

US Secretary of State: Good progress has been made in ceasefire negotiations

On October 31 local time, US Secretary of State Antony Blinken said that negotiators of all parties had made "good progress" in the ceasefire negotiations between Israel and Hezbollah in Lebanon.

Antony Blinken said at the press conference on the same day: "Based on my recent visit to the Middle East and the ongoing work, we have made good progress in the negotiations."

On October 30th local time, Naeem Kassem, the General Secretary of Hezbollah in Lebanon, stated that Hezbollah would resist to the end, while also stating that the basis for any negotiations is a ceasefire first; Israeli Prime Minister Netanyahu emphasized during a meeting with two White House officials on the 31st that the key to the ceasefire agreement with Hezbollah is to eliminate security threats.

Iran prepares to launch attacks on Israel from Iraqi territory within a few days

Axios quoted two unnamed Israeli sources on Thursday as saying that Israeli intelligence indicates that Iran is preparing to attack Israel from Iraqi territory in the coming days, possibly before the November 5th US presidential election.

Axios reported that the attack is expected to be launched from Iraq, using a large number of drones and ballistic missiles.

According to reports, attacks carried out by pro Iranian militia groups in Iraq may be an action taken by Tehran to prevent Israel from attacking Iran's strategic targets again.

Israel and Iran have carried out a series of tit for tat military strikes as part of the Middle East war triggered by the Gaza conflict.

On Saturday, Israeli military aircraft attacked missile factories and other locations near Tehran and western Iran in retaliation for Iran's launch of over 200 missiles into Israel on October 1st.

A spokesperson for the Iranian Ministry of Foreign Affairs stated on Monday that Tehran will "use all available tools" to respond to Israel's attack.

The number of initial jobless claims in the United States has hit a five month low and consumer spending is stable, demonstrating the strength of the economy

The number of new applications for unemployment benefits in the United States fell to the lowest level in five months last week, and consumer spending in September increased more than expected, indicating that the economy is still strong as it enters the final stage of 2024 and in the days leading up to next Tuesday's presidential election.

Although prices rose last month, inflation still showed a downward trend. Other data on Thursday showed that labor costs in the third quarter saw the smallest increase in over three years. These data may keep the Federal Reserve on track to cut interest rates next week and possibly in December.

The United States will hold a presidential election on November 5th. Despite strong economic performance, high food and housing costs have caused anxiety among families.

Shannon Grein, an economist at Wells Fargo, said, "Consumers may say they are feeling down, but spending doesn't seem to have been affected by the slowdown in the labor market and high prices

The US Department of Labor reported that as of the week ending October 26th, the number of first-time applicants for state unemployment benefits decreased by 12000, to 216000 after seasonal adjustment, the lowest level since May.

The third consecutive week of decline may reflect the weakening impact of hurricanes Helen and Milton, which drove an increase in unemployment claims in early October and have remained at a high level since mid month. Boeing BA The strike by N also increased the number of applicants, forcing the aircraft manufacturer to implement rolling holidays and causing harm to its suppliers.

Economists previously estimated that the number of applicants in the past week would be 230000. Last week, the number of unadjusted applicants decreased by 3349 to 200132.

According to the report on the application for unemployment benefits, as of the week of October 19th, the seasonally adjusted number of renewed unemployment benefits representing recruitment was 1.862 million, a decrease of 26000.

After experiencing fluctuations caused by hurricanes and strikes, the situation in the labor market may not have changed much. A report released by global job agency Challenger, Gray&Christmas on Thursday showed that US employers' layoff plans for October decreased by 23.7% to 55597 people.

Another report from the US Bureau of Statistics shows that consumer spending, which accounts for over two-thirds of US economic activity, increased by 0.5% last month after rising 0.3% in August.

Economists previously predicted that consumer spending would increase by 0.4%, compared to the previously reported 0.2% growth in August. After adjusting for inflation, consumer spending increased by 0.4%, putting consumption on a higher growth track after entering the fourth quarter.

The increase in expenditure involves goods and services, supported by a 0.3% increase in income, while wages and salaries have increased by 0.5% for the second consecutive month. Some consumers have used their savings, causing the savings rate to drop from 4.8% in August to 4.6%, but the savings rate remains at a relatively high level.

Despite a slight increase in price increases in September, the overall inflation situation remains moderate as wage pressures weaken.

After a 0.1% (uncorrected) increase in August, the Personal Consumption Expenditures (PCE) price index rose by another 0.2%. Due to rising costs of housing, utilities, healthcare, and transportation, service prices have increased by 0.3%. The commodity price decreased by 0.1%, marking the second consecutive month of decline.

In the 12 months ending in September, the PCE price index increased by 2.1%, which is the smallest year-on-year increase in PCE price index since February 2021, compared to a 2.3% increase in August.

Excluding the volatile food and energy sectors, the PCE price index rose by 0.3% after a 0.2% increase in August. In the 12 months ending in September, the core inflation rate increased by 2.7% for the third consecutive month. The Federal Reserve tracks PCE price indicators to achieve its 2% inflation target.

The third report released by the US Bureau of Statistics shows that the Employment Cost Index (ECI), the most widely used measure of labor costs, rose by 0.8% in the third quarter. This is the smallest increase since the second quarter of 2021, after a previous increase of 0.9% without correction.

In the 12 months ending in September, labor costs increased by 3.9%, the smallest increase since the third quarter of 2021, while in the year ending in June, labor costs increased by 4.1%.

US Treasury yields rise, Friday's employment report may trigger a huge market reaction

The yield of US treasury bond bonds rose on Thursday, and the yield of two-year treasury bond bonds hit a three-month high before the release of the high-profile October employment report on Friday, after Thursday's data showed that wage growth slowed and consumer spending was strong.

Friday's data may cause a huge market reaction, and if the data is much stronger than expected, it may reduce the possibility of the Federal Reserve cutting interest rates. Economists surveyed by Reuters expect employers to create 113000 new jobs this month.

Gennadiy Goldberg, the head of US interest rate strategy at TD Securities in New York, said, "If Friday's data unexpectedly rises, it may make the market question whether the Federal Reserve needs to cut interest rates at future meetings, which will undoubtedly raise questions about things like the December rate cut

Meanwhile, a weak data may be attributed to the impact of recent hurricanes affecting areas such as Florida and North Carolina. It is expected that this data will also be negatively affected by strikes in the aviation manufacturing industry and three chain hotels.

The net conclusion drawn from this is that there isn't really much here to stop the Fed from cutting interest rates, "Goldberg said." But ultimately, it also shows that the Fed doesn't necessarily need to rush to cut rates

The 10-year yield rose 1.8 basis points to 4.282% in late Thursday trading. On Tuesday, the yield reached a nearly four month high of 4.339%.

The two-year yield rose 1 basis point on Thursday to 4.166%, reaching a high of 4.218%, the highest since August 1st.

One day after the British Chancellor of the Exchequer Rachel Reeves submitted his budget to Parliament, the rise in the yield of British treasury bond bonds also pushed up the yield of American bonds.

LPL Financial's Chief Fixed Income Strategist Lawrence Gillum said in an email comment, "The latest sell-off in the US interest rate market is likely to be a spillover effect of the UK's increased borrowing and fiscal stimulus plans in the coming years, and this budget is believed to trigger inflation

Daily chart of spot gold