Overnight market gold traded in a choppy, softer range, with spot gold in London falling 0.45% to close near $4,033 per ounce, while the SHFE gold main contract dropped 1.02%.
The move came after U.S. third-quarter GDP and PCE inflation data beat expectations, and following the Federal Reserve's rate meeting, market concerns about a December rate hike showed no sign of easing. Combined with renewed turbulence in overseas financial markets and lingering liquidity worries, precious metals once again pulled back, warranting a cautious stance.
With macro factors weighing on prices, gold is under short-term pressure. Investors are watching Israel's election and U.S. September nonfarm payrolls, and the market's focus may gradually shift toward the period around the U.S. midterm elections.
On the macro data front, the initial estimate for U.S. third-quarter real GDP growth came in at an annualized 3.4%, above the market forecast of 3.2% and the prior reading of 2.2%. However, the quality of that growth is questionable: the initial estimate for third-quarter final sales rose just 1.7% annualized, below the expected 2.0% and down sharply from the prior 2.8%, meaning a considerable portion of the 3.4% growth came from inventories and net exports rather than end demand.
U.S. September PCE inflation rose to 3.6% year-on-year, the highest since May, while core PCE climbed to 3.1% year-on-year, with rebounding energy prices a key driver of the pickup in inflation.
The labor market also remains tight, with initial jobless claims for the week ending October 24 at 194,000, below the expected 199,000. Precious metals showed little immediate reaction after the data, as the market had already priced in a combination of strong growth and sticky inflation.
The Fed left rates unchanged at its October meeting, and Warsh struck a cautious tone at the press conference: he made clear that "except in a crisis, don't trust forward guidance," said the market impact of the September rate hike was broadly as expected and that credit conditions have tightened, yet he was "unwilling and unable to judge conditions as tight." He also noted third-quarter GDP could exceed 3% and that most officials believe the economy is not overheating. On the rate-setting framework, he said the arrangement of eight meetings a year is appropriate, that next year one meeting will not vote on the policy rate, rising to two in 2028, and announced he will attend a working group hearing on November 16 focused on AI's impact on productivity and employment.
Author: Li Qi. Professional qualification: F3046227. Trading advisory qualification: Z0016145.
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