Last Friday, after five consecutive days of gains, the US dollar index took a slight breather but remained above the 103 mark, closing down 0.3% at 103.45. The benchmark 10-year US Treasury yield closed at 4.0820%; the two-year US Treasury yield, which is more sensitive to monetary policy, closed at 3.9650%. US stocks ended slightly higher, with the Dow Jones Industrial Average up 0.09%, the S&P 500 up 0.4%, and the Nasdaq up 0.63%. The NASDAQ Golden Dragon China Index closed up 3.03%, with Ke Holdings (BEKE.N) up 8.37%, and Li Auto (LI.O) up 6.3%.
Risk alerts for Monday:
- At 14:00, Germany will release its September PPI data;
- At 22:00, the United States will announce the September Conference Board Leading Economic Index (LEI) monthly rate;
- At 22:55, 2026 FOMC voter and Dallas Federal Reserve President Logan will deliver a speech and participate in a Q&A session at the 2024 Securities Industry and Financial Markets Association (SIFMA) Annual Meeting.
- Today, the IMF-World Bank 2024 Fall Annual Meetings are held and will continue until October 26th.
Tensions have escalated following a drone attack on Israeli Prime Minister Netanyahu's private residence. Although no casualties were reported, the incident has heightened market concerns over the situation in the Middle East. The firing of rockets by Hezbollah towards northern Israel further indicates the potential for conflict escalation, significantly increasing investors' sensitivity to geopolitical risks.
In this context, the appeal of gold as a safe-haven asset has become more pronounced. Expectations surrounding accommodative monetary policy have further fueled the rise in gold prices. The market widely anticipates that the Federal Reserve will continue to cut interest rates at future meetings, making gold, which does not generate interest, relatively more attractive.
According to data from the London Stock Exchange, gold prices have risen by over 30% so far this year, marking the largest annual increase since 1979. The expectation of interest rate cuts has enhanced the appeal of gold, especially after the European Central Bank cut rates by 25 basis points last week, with the market anticipating similar cuts in the coming meetings. Following the Federal Reserve's 50 basis point rate cut in September, the market's probability of another 25 basis point rate cut in November stands at a high 99.3%.Gold prices breached the $2,700 per ounce mark last Friday, closing at $2,722.13 per ounce, marking a historical first, aided by escalating tensions in the Middle East and expectations of loose monetary policy, with gold prices accumulating a 2.45% increase for the week. This Monday morning, after the market opened, gold continued to set new intraday highs. Considering the current high prices, it is not advisable to directly chase the upward trend, so investors should patiently wait for a gold pullback today. Investors should focus on the 1-hour support level, and after the pullback stabilizes, attempt to go long on gold.
Additionally, this week's economic data is relatively scarce, so investors need to closely monitor the PMI data performance for October in European and American countries, as well as speeches by Federal Reserve officials and news related to geopolitical situations. This information will have a significant impact on market sentiment and gold price trends. Especially against the backdrop of increasing geopolitical risks, any unexpected events could trigger a sharp market reaction. The uncertainty about future policy directions will also continue to influence investor decisions, thereby affecting the relative attractiveness of gold.
Despite better-than-expected consumer and industrial output data in September, the economic growth rate of the Asian powerhouse in the third quarter was the slowest since 2023. As the world's largest oil importer, the demand situation in the Asian powerhouse directly affects the trend of oil prices. With slim refining profits and weak fuel consumption, the production of refineries in the Asian powerhouse has declined for the sixth consecutive month, further intensifying market concerns about future demand.
Furthermore, the central bank of the Asian powerhouse announced the establishment of a stock repurchase and increase in re-lending, with an initial quota of 300 billion yuan. This policy aims to boost the economy and may provide some support for oil prices in the future. However, market confidence in economic growth remains fragile, leading to less optimistic expectations for crude oil demand from investors.
Data released by the U.S. Energy Information Administration (EIA) last Thursday showed that U.S. crude oil production reached a new high. In the week ending October 11th, oil production increased by 100,000 barrels per day to 13.5 million barrels per day, breaking the record of 13.4 million barrels per day set two months ago. Despite this, the EIA also pointed out that last week, U.S. crude oil, gasoline, and distillate fuel inventories decreased, providing some support for oil prices.
However, the market reacted strongly to reports urging the Israeli government not to target Iranian oil infrastructure, leading to further declines in oil prices. Although analysts from Citi Research believe that the average price of Brent crude oil in the fourth quarter of 2024 may be $74, the short-term bullish options do not seem solid at these levels.
The escalating tensions in the Middle East have increased market uncertainty. The private residence of Israeli Prime Minister Netanyahu was attacked by a drone, causing no casualties, but the incident raised concerns about further deterioration of the situation. Hezbollah in Lebanon fired rockets into northern Israel, resulting in one death and at least nine injuries, making the situation more complex.
Iranian Foreign Minister Abbas Araghchi stated that any Israeli attack on Iran would touch a "red line" and would be met with a proportionate response. This statement has intensified market concerns about the tense situation in the Middle East, potentially affecting the stability of crude oil supplies.
Last Friday, crude oil futures prices fell by more than 2%, and the overall decline for the week exceeded 7%. This series of declines marks the largest weekly decline in the crude oil market since OPEC and the International Energy Agency (IEA) downgraded global oil demand forecasts for 2024 and 2025 on September 2nd. Today, investors should focus on the 4-hour resonance support area below, and after a stable recovery, go long on crude oil. At the same time, investors need to pay attention to the strength of the short-term rise in crude oil and whether it can break through the 1-hour pressure area.
Investors also need to closely monitor changes in the stock market and market sentiment in the Asian powerhouse. A new round of stimulus measures in China may enhance risk appetite, thereby providing some support for the global stock and commodity markets. In addition, changes in geopolitical situations will continue to affect the trend of oil prices.