On Thursday (14th), during the Asian markets, gold prices continued their downward trend, with spot gold prices falling below $2,560, hitting a nearly two-month low at $2,559.23 per ounce, a decrease of about 0.53%. This decline was mainly influenced by a stronger dollar, high U.S. inflation data, and uncertainty over Federal Reserve policy prospects. Meanwhile, gold futures prices fell to $2,564.10 per ounce, dropping more than 8% from the high recorded in October.
The strong performance of the dollar has been the main source of pressure for the metals market. The U.S. Consumer Price Index (CPI) for October, published on Wednesday, showed inflation remained at a high level, sparking market expectations of an extended period of high interest rates and Federal Reserve rate hikes. As a result, the dollar index rose to a one-year high at 106.75, an increase of about 0.26%.
In terms of industrial metals, copper prices fell to a three-month low, driven by increased concerns over the demand outlook from China, the largest importer. Additionally, the market expects that if Trump is re-elected, he may raise tariffs on China, placing further pressure on copper prices.
Despite data showing inflation remains high, market bets on a Fed rate cut in December have increased. However, the outlook for long-term interest rates has become more uncertain, mainly due to market caution regarding the potential inflationary risks posed by expansionary and protectionist policies under a possible Trump administration, which is expected to keep long-term rates relatively high.
This week, statements from Fed officials have also heightened market uncertainty. Minneapolis Fed President Kashkari pointed out that if inflation continues to rise before December, the Fed may pause its rate cuts. St. Louis Fed President Mussa said the downward trend in inflation may stall, or even rebound, highlighting the unpredictability of policy paths.
Thursday's market focus will be on Federal Reserve Chairman Jerome Powell's speech. Following last week's 25-basis point rate cut, Powell reiterated that the Fed will make further policy adjustments based on a data-driven approach. Investors are closely watching whether Powell will hint at further changes in policy stance to seek more signals for market direction.
