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Interest rates are going to fall, the dollar is going to fall, and the world is not peaceful. Is the "perfect storm" for gold really coming?
Wonderful introduction:
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Hello everyone, today XM Forex will bring you "[XM Forex Platform]: Interest rates are going to fall, the U.S. dollar is going to fall, and the world is not peaceful. Is the "perfect storm" for gold really www.xmtraders.coming?". Hope this helps you! The original content is as follows:
December 1, Monday. As the global financial market enters the key policy window period at the end of the year, it shows a pattern of convergence of risk appetite and adjustment of macro expectations. The U.S. dollar index continues to be under pressure, U.S. bond yields have fallen slightly, and geopolitical negotiations have released limited signs of easing, but the overall market still maintains a cautious sentiment. Against this background, the www.xmtraders.commodity market trend showed structural differentiation. Precious metals, especially spot gold, continued their strong performance and once again set a new high in the past six weeks.
The recent dominant macro force still www.xmtraders.comes from changes in monetary policy expectations. As a number of U.S. economic data continue to show a slowdown in growth momentum, market expectations that the Federal Reserve will launch a new round of interest rate cuts at its December interest rate meeting have increased significantly. The latest non-farm employment data released was weaker than the previous value, and the consumer confidence index also showed a downward trend. The manufacturing activity has been in contraction range for several consecutive months, reflecting the fact that domestic demand expansion is weak. These indicators jointly strengthen the market's judgment that the endogenous power of the economy is insufficient, thereby promoting the interest rate futures market to re-price future policy directions.
According to the implied probability calculation of the derivatives market, the market has currently priced in about an 87% probability that the Federal Reserve will implement a 25 basis point interest rate cut at the Federal Open Market www.xmtraders.committee meeting on December 9th and 10th. If this expectation is realized, it will be the second interest rate cut this year after September, marking a further shift in the stance of monetary policy towards easing. This shift directly weakens the relative attractiveness of U.S. dollar assets, especially as downward pressure on real interest rates increases, thereby reducing the opportunity cost of holding gold, a non-interest-bearing asset. At the same time, the tone of many Federal Reserve officials’ recent speeches has tended to be dovish. Although San Francisco Fed President Mary Daly is not todayHowever, she clearly expressed her support for adopting a more prudent interest rate strategy in the current environment. This move was interpreted by the market as an important signal that the dovish voices within the decision-making team have strengthened. Although individual officials such as Dallas Fed President Lori Logan still emphasize the need to maintain policy patience, the overall www.xmtraders.communication direction is gradually moving closer to market expectations, forming a systemic suppression of the US dollar. From an exchange rate perspective, the U.S. dollar index has continued to weaken since last week and has now fallen back to around 99.10, hitting a nearly two-week low.
Geopolitical factors also provide periodic support for gold prices. Although the peace negotiation process between Ukraine and Russia has not achieved a breakthrough, the US attitude has undergone subtle adjustments, and the deadline for reaching an agreement originally scheduled for this Thursday has been substantially postponed. According to people familiar with the matter, a new draft containing 19 clauses is being prepared, covering energy facility protection, food transportation channel security, and prisoner of war exchange mechanisms. Although German Chancellor Merz has reservations about the results of this round of consultations and believes that the possibility of reaching a consensus within this week is low, the Kremlin responded more restrainedly and showed a certain degree of willingness for dialogue. This "cautiously optimistic" atmosphere has prevented the market from seeing a large-scale withdrawal of risk premiums. Instead, it has maintained a certain degree of risk-averse positions due to the persistence of uncertainty. In addition, the demand for gold purchases at the central bank level remains strong. Many emerging market countries continue to increase their gold reserves to cope with potential external shocks. The trend of ETF capital inflows has not been reversed, indicating that institutional allocation logic has not yet undergone a fundamental change.
As a result, the spot gold price has been boosted by multiple positive factors. It once touched US$4,262 per ounce on Monday, the highest level since October 21. The current price has a cumulative increase of nearly 60% from the beginning of the year, and is expected to record the best annual performance since 1979.
In terms of technical form
According to the daily chart analysis of spot gold, the price of gold has been in a volatile upward trend recently. The price is currently trading around $4,250, which is close to the pressure area of the previous high of $4,262.23. The price has shown some upward momentum during the rise, but still faces the test of key resistance levels.
From the perspective of technical indicators, the DIFF line (49.82) of the MACD indicator is higher than the DEA line (39.01), and the MACD histogram is positive, showing that gold has strong short-term upward momentum. Meanwhile, gold prices found support near $4120.00 and formed an upward trendline (3886.51 to 4120.00). This technical form shows that gold prices still maintain a certain upward trend, but it is necessary to pay close attention to whether the price can break through the previous resistance area and whether there will be a correction.
Outlook
If the soon-to-be-released ISM manufacturing PMI falls less than expected, or the personal consumption expenditures price index shows that inflation is highly sticky, bets on interest rate cuts may be temporarily suppressed and trigger a correction in gold prices. But from a medium-term perspective, as long as the Fed maintains its current policy narrative and geopolitical tensions remainUnless the tension is fundamentally alleviated, there is still room for gold's valuation center to move upward. Capital flow data shows that the proportion of long positions in gold futures has continued to rise recently, and the net long position in the CFTC position report is close to a record high, reflecting that market sentiment is biased toward optimism.
Taken together, the current operating logic of the www.xmtraders.commodity market is still dominated by macro variables, among which the expected adjustment of monetary policy is the core driving force affecting precious metal pricing. The weakening of the U.S. dollar's credit margin, the establishment of a downward trend in real interest rates, and the persistence of geopolitical uncertainty have jointly formed the basic conditions to support the rise of gold prices. At the same time, although the expansion of the balance sheets of major central banks around the world has slowed down, they have not started the process of substantial balance sheet reduction.
Next, the focus will be on the PCE price index released on Friday. As the inflation measure that the Fed is most concerned about, this data will directly affect the final decision-making weight of the December interest rate resolution. In addition, the progress of the follow-up negotiations on the Ukraine conflict and the final manufacturing PMI value of major countries will also become important windows for observing the global economy.
The above content is all about "[XM Foreign Exchange Platform]: Interest rates are going to fall, the U.S. dollar is going to fall, the world is not peaceful, is the "perfect storm" for gold really www.xmtraders.coming?" It is carefully www.xmtraders.compiled and edited by the editor of XM Foreign Exchange. I hope it will be helpful to your trading! Thanks for the support!
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