Support
Gold's five-day winning streak continues
Gold hit a new high of $2,720 per ounce last week, reaching above $2,730 on Monday during Asian trading, marking its fifth consecutive day of gains.
Silver rose 2.6%, trading above $32.50, near its historical peak
China’s rate cuts aim to boost domestic activity and oil demand
Japanese yen gained, while Canadian dollar and British pound weakened
Recent strong earnings from the U.S. banking sector have provided a boost to smaller companies, reinforcing investor optimism that the Federal Reserve might opt for a more accommodative monetary policy without triggering a recession. Looking ahead, markets are preparing for another round of quarterly earnings reports, preliminary PMI data for October, and speeches from key central bank officials.
Precious Metals
Gold and silver ended the week as the best-performing assets. Gold surged over 1%, reaching a new all-time high of $2,720 per ounce, while silver rose 2.6%, trading above $32.50 per ounce, nearing its historical peak of around $33. These gains are especially noteworthy given the strengthening U.S. dollar in recent weeks. Ongoing geopolitical tensions and uncertainties surrounding the U.S. presidential election continue to drive demand for safe-haven assets. Long-term analyst forecasts remain bullish, suggesting even higher levels in the future.
Gold's upward trend persisted for the fifth straight day on Monday, marking the seventh positive session in eight days, as prices reached a new high of around $2,732-2,733 during Asian trading hours. This recent movement solidifies Friday’s breakout above the $2,700 mark, supporting a bullish outlook for the metal.
However, caution remains warranted. The U.S. dollar has seen renewed dip-buying, stalling a recent pullback, driven by growing market sentiment that the Federal Reserve may proceed with moderate rate cuts. Elevated U.S. Treasury yields could pose a headwind for gold prices. Furthermore, a risk-on sentiment, supported by China's recent economic stimulus measures, may temper bullish sentiment around XAU/USD, potentially limiting further gains.
Crude Oil Market
In the oil sector, West Texas Intermediate (WTI) prices edged higher, recovering from a sharp 7% decline last week, trading around $68.90 per barrel during Asian trading on Monday. Downside risks appear to be mitigated by China’s recent rate cuts. The People’s Bank of China (PBoC) recently lowered the 1-year Loan Prime Rate (LPR) from 3.35% to 3.10% and the 5-year LPR from 3.85% to 3.6%, in line with market expectations. However, the market’s reaction has been relatively muted, as these rate cuts had already been signaled by Chinese officials in advance. Nonetheless, the measures are expected to stimulate domestic economic activity, potentially increasing demand for oil.
Currencies
Notable movements include significant gains in the Japanese yen, while the Canadian dollar and British pound have been trading under pressure.
The macroeconomic calendar for today is relatively light. Later in the day, attention will shift to speeches from several Federal Reserve officials.
In Europe, investors are keeping an eye on the release of German Producer Price Index (PPI) data, which might provide further direction for the EUR/USD.
