Gold prices soared to a record high above $2700, bringing joy to gold enthusiasts as they enjoy a 4-day rally and a fresh all-time high. The market saw strong and steady bids with dips being quickly bought, despite a more positive sentiment in Chinese equities today, with MCHI up 4.4%.
The optimistic mood in China led to a decent retracement in the US dollar, erasing most of yesterday’s retail-sales-driven bid. There is a belief that a stronger economy in China will positively impact Europe and global growth, narrowing the gap with the US. Investors are also looking forward to 2025 growth as equities continue to show positive signals.
The euro rebounded from a two-month low, gaining 33 pips on the day and reaching 1.0864. The market is speculating about a potential 50 bps cut in December, with odds at 23%, possibly reflecting optimism that inflation will remain low due to the continued decline in oil prices.
Meanwhile, the pound climbed back above 1.30 but formed a minor double top near 1.3075, indicating a level to monitor next week. The current rate stands at 1.3042.
On the other hand, the Canadian dollar faced downward pressure once again, primarily due to oil prices. Investors are also keeping an eye on the upcoming Bank of Canada decision, with the market pricing in a 50 basis point rate cut. The odds of a rate cut now stand at 93%.
In other news, US housing starts for September came in at 1.354m, slightly higher than the expected 1.350m. Federal Reserve officials shared their views, with Bostic stating that the neutral policy rate is in the 3-3.50% range and warning of a potential lull in activity and spending around the election. Additionally, Waller refrained from commenting on monetary policy or the economic outlook.
ECB’s Makhlouf expressed his belief that rates should not have been cut faster, while the Atlanta Fed’s GDPNow projection remained unchanged at 3.4% for the third quarter. Russian President Putin mentioned that a BRICS unified currency is premature.
In the markets, gold prices surged by $27 to reach $2719, while US 10-year yields dipped by 2 bps to 4.07%. WTI crude oil saw a decrease of $1.27, falling to $69.40. The S&P 500 experienced a 0.3% increase, with the JPY leading and CAD lagging behind.
Overall, the market dynamics reflect a mix of optimism and caution, with various economic indicators and geopolitical events influencing investor sentiment and driving movements in different asset classes. The record high in gold prices underscores the ongoing demand for safe-haven assets amidst global uncertainty.
