$2700!

After the United States non-farm payrolls exceeded expectations in October, the international gold price had a significant decline in several trading days, once returning to the integer mark of $2600 / ounce, and then rose continuously for nearly seven trading days. At the same time, the U.S. dollar index also rose strongly, from 100 points to around 103.6, the real yield of the 10-year U.S. Treasury bond also rebounded strongly, and the rise in international gold prices diverged from macro fundamentals. The ongoing conflict in the Middle East, tensions on the Korean Peninsula, the end of the United States election, the rise in risk aversion caused by the world's military and political uncertainty, and the fact that the Federal Reserve will continue to cut interest rates this year may be the main reasons for the rise in international gold prices. As of press time, London gold was $2,704.45 per ounce (614.94 yuan/gram), and the London spot gold price stood above the $2,700 per ounce mark for the first time in history.

Image source: Sina Finance

The Fed's continued interest rate cuts are expected to continue to push international gold prices higher. As the Fed feared, the United States economy did show signs of weakening, not only in the traditionally cash-sensitive real sector, but also in the United States' recent consumer credit volume is far less than expected, commercial real estate credit risk has increased significantly, credit card delinquency rates are rising, and the Fed expressed concerns about financial market risks in the minutes of its September meeting. In addition, the overall inflation in the United States has fallen significantly, the level of the federal funds rate has room for further decline, and the market predicts that the Fed will cut interest rates once or twice this year, which will be obviously beneficial to gold prices in the early stage of the Fed's rate cut.

The turbulent political and economic situation in the world has brought about the demand for safe haven. The likelihood of a full-scale war in the Middle East is increasing, while geopolitical tensions in East Asia are equally tense. In addition, United States as the election draws to a close, Trump's approval rating is ahead of Harris in the current election, and if Trump returns to power, economic friction with other countries will be inevitable for United States.

Investors should pay attention to the adverse impact of the rise in the US dollar index and US Treasury real yields. Recently, under the positive effect of the Fed's interest rate cut expectations rising and landing, although the United States economy has weakened as a whole, it has not yet seen recession-like changes, showing a certain degree of resilience, with new non-farm jobs rising sharply in September, the unemployment rate falling, and wage growth rising. In addition, interest rate cuts have also been positive for United States equities, with the Nasdaq and S&P both hitting new highs. Wage growth and wealth play a positive role for consumption, United States Commerce Department data showed that retail sales in September exceeded expectations and the previous value, and expressed the view that the economy will maintain strong growth in the third quarter, but also strengthened the possibility of a small interest rate cut by the Federal Reserve next, the economic performance exceeded expectations and the change in interest rate cut expectations led to a short-term rise in US real yields. Compared to United States, the eurozone economy is weak, job growth is slowing, household consumption is lower than expected, and the European Central Bank announced a 25 basis point rate cut this week to support the economy, the third rate cut this year. In terms of market performance, the euro has fallen 2.8% against the dollar so far this month, while the dollar index has risen 3%, and the trend has not fully turned.

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