Market Weighs on Fed Rate Cut, Gold Takes a Breather Post-Rally?
Overseas, gold opened with a gap lower and then fluctuated upwards all the way. During the US session, it touched the highest level of 2740, then quickly fell back to around 2713, and is now rebounding again.
A new week begins, and this week is technically the last week of October. However, the timing is a bit awkward. The core PCE data that should have been released this week has been postponed to next week. Next week is also the first Friday of November, with the non-farm payroll data, so this week still has no significant data releases, while next week is packed with important data.
What might be worth noting and paying attention to this week is probably the Economic Conditions褐皮书 on Thursday. This is like choosing the best among the worst. As far as I can remember, this data had an impact around mid-2018, when it initiated the death march of the US dollar. For the rest of these years, this data has been a bit of a sidekick.
Let's look at what the Federal Reserve officials have said and what the market is currently expecting.
Yesterday, several Federal Reserve officials spoke, and their basic attitudes were similar. The Federal Reserve will continue to cut interest rates, but it will be more cautious. In other words, the pace of rate cuts will be slower, and the market's expectations have also changed slightly.
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Since the Federal Reserve cut interest rates by 50 basis points in September, US economic data has been slapping the Federal Reserve in the face. First, the September non-farm payroll data made a full rebound from the lethargy of July and August, as if to tell the market that the employment data is still fine and not that bad. Then, the September CPI data also made a full rebound, as if to tell the market that the inflation data is also fine and not that easy to be suppressed.
With such employment and inflation data presented to the Federal Reserve officials, no one dares to speak out of turn, for fear that the pace of rate cuts is too fast. Employment is saved, but inflation rises again, and no one can bear the responsibility for the second round of inflation.
So we see that the market is still gambling on the remaining two interest rate decisions this year, whether the Federal Reserve will cut interest rates once or twice.
On the chart, gold broke through the previous high of 2685 last Thursday and has been fluctuating upwards. Yesterday, it touched the highest level of 2740 and is still maintaining a high-level fluctuation. Last week, we have been waiting for gold to adjust after it reached and broke through 2685. However, the 1-hour chart went up with overbought and death cross, and finally fell back last night, which led to a death cross at the 4-hour level. So what we need to pay attention to this week is the adjustment at the 4-hour level.
Looking at the 4-hour chart, the MACD fast and slow lines at the 4-hour level have already formed a death cross, indicating that gold has entered the adjustment phase at the 4-hour level. However, it is important to note that, generally speaking, after the 4-hour death cross, the market will not rise again, either staying at a high level or fluctuating downwards. But there are special cases, such as the high point of 2685, which occurred after the 4-hour death cross. This kind of situation is usually very short-lived.Currently, the 1-hour chart's fast and slow lines have once again formed a golden cross above the zero axis. Therefore, we should also be cautious of a situation similar to what happened previously at 2685, where gold may experience a 4-hour bearish cross, followed by a brief breakout above 2740, creating a new high point. After that, a 1-hour top divergence would form, before officially entering a 4-hour correction phase.
For intraday trading opportunities, one can look out for short-selling chances when gold reaches new highs above 2740. The specific new high level is quite random, as there is no defined territory above. I do not know the exact price points, but there are only a few typical top patterns, such as top divergence or descending triangles. The general idea is as mentioned, but the exact price points and patterns require further observation. Everyone can wait for the live broadcast tonight for more details.
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