With the conclusion of the US presidential election, market attention towards the "Trump trade" has continued to heat up, leading to a substantial pullback in gold prices last week. Investors are concerned that Trump's tax cuts and tariff policies might fuel inflation, reducing the Federal Reserve's room for accommodative policies, causing gold to briefly drop below the $2700 mark. Last week (November 4 to November 10), spot gold fell over $100, a weekly decline of 1.90%; spot silver plummeted 3.52%, indicating significant volatility in the metals market.
This week, the market focus shifts to the upcoming release of the US October Consumer Price Index (CPI). The CPI annual rate is expected to rise from 2.4% in September to 2.6%, while the monthly rate remains unchanged. Analysts believe that if inflation meets or exceeds expectations, the Federal Reserve may reduce its rate-cut plans for next year, putting pressure on gold. Conversely, if inflation falls short of expectations, it may provide an opportunity for a gold rebound. Currently, interest rate futures indicate that traders expect the Federal Reserve to cut interest rates by 25 basis points in December, twice in the first half of 2025, and halt easing, lowering the federal funds rate target range to 3.75%-4%.
Despite the increase in short-term bearish factors, analysts at the Royal Bank of Canada remain optimistic about the long-term prospects for gold. They believe that although gold prices are under pressure in the near term, there is still upside potential as we move into 2025, especially against a backdrop of increasing global economic uncertainty, where gold may regain investor favor. The analysis indicates that the asset management scale of gold is gradually growing, and it is expected to continue attracting substantial investment in 2024.
From a technical perspective, the gold price (XAUUSD) currently resides below the five-day moving average, with the MACD indicator showing a continued downtrend and an RSI value of 44, suggesting strong selling pressure. Overall, gold may continue to retreat in the short term, but the upward trend in the medium to long term remains intact. With the release of the US October CPI data this week, the future trajectory of gold will become clearer.
