GOLD: Fed Cut Expectations Drive Gold Higher, Nov Jobless Claims Out Later
Gold has trended higher during Wednesday’s APAC session driven by rising Fed December rate cut pricing and the weaker US dollar, with BBDXY down 0.2% after Tuesday’s -0.3%. Fed funds pricing is now at 24bp of easing on 10 December up from 22bp this morning, which is positive for non-interest bearing gold. As a result, bullion is up 0.7% to $4158.0/oz, close to the intraday high of $4169.43 but below initial resistance at $4245.2, 13 November high.
- Gold has risen previously because of threats to Fed independence and today there were headlines suggesting the current National Economic Council Director Hassett could be the next Fed chair and like President Trump, he apparently believes in easier monetary policy.
- Tuesday’s data were mixed but there was a drop in the 4-week average ADP employment and November consumer confidence, while September retail sales and PPI were lower than expected. The Dallas and Philly Fed November services indices were higher.
- Silver is 0.8% higher at $51.89 after reaching $52.07 but breaks above $52 have been brief. Despite today’s rally, it remains well below the bull trigger at $54.480.
- Equities are stronger with the S&P e-mini is up 0.3%, Hang Seng +0.5% and KOSPI +2.1%. Oil prices are higher with WTI +0.4% to $58.18/bbl. Copper is up 0.7%.
- Later the Fed’s Beige Book is published and US November jobless claims for November 22 week, preliminary September durable goods orders, September lead index and November MNI Chicago PMI print. This is the last US data for this week due to the Thanksgiving holiday.
- Outside the US, the UK budget is released and the ECB’s Lagarde and Lane speak.
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
AUSSIE BONDS: Weaker Futures, Risk On Weighs, RBA's Bullock May Signal Caution
Aussie bond futures are holding weaker, but slightly up from session lows. 10yr futures (XM) were last 95.81, off 3.5bps (session lows rest at 95.79), while 3yr futures were 96.58 off 4bps (session lows at 96.57). After the initial gap lower at the open, as risk on was dominated by positive US-China trade sentiment from the weekend, we have largely been range bound. ACGB yields are off earlier highs, around +3.5-4.5bps firmer, outperforming US Tsys so far today (benchmarks
- Domestic news flow has been light, as markets await an RBA Bullock Fireside chat latter, at the ABE dinner (7:15pm AEDT). This is the final RBA speak before next Tuesday's monetary policy outcome. It may be the case Bullock stays quite non-committal around easing risks at that meeting (in Bullock's style of not ruling anything in or out). Market pricing is delicately poised, with a 25bps cut around 60% priced per OIS dated RBA contracts for the Nov meet.
- Monetary policy centered questions this evening may focus on this recent disappointing jobs data but Bullock has said previously that given volatility it is best to focus on the 3-month average of the unemployment rate which was consistent with a gradual easing in conditions.
- The 3y ACGB yield is trying to recapture the 3.40% handle, with after the earlier break in Oct out of the 3.40-3.60% range to the downside. The 10yr is short is potential resistance around 4.20%.
- The AU-US 10yr spread is +15bps, so within recent ranges. The bias would be for higher levels in this spread if we see further risk on related to US-China trade outcomes.
- On the data front, things are quiet until Wednesday's Q3 CPI print.
GOLD: Gold & Silver Continue Correction As Trade Risks Ease Substantially
While gold prices are off their earlier low of $4058.46/oz, they have held onto most of today’s losses driven by news of a draft US-China trade deal being reached. Presidents Trump and Xi are due to confirm it when they meet this week. Bullion is currently down 1.4% to $4056.0. US yields are higher while the US dollar is flat.
- US-China trade progress reduces global risks substantially as the 100% US tariff is unlikely now to be imposed on 1 November which would have resulted in retaliation from China and an escalation that would have had global consequences. Thus safe-haven demand for gold has pulled back.
- The focus this week is on Wednesday’s Fed decision. The USD OIS market has a 25bp cut priced in with another one at the 10 December meeting. Gold has expected this for some time helping to drive the rally as easing is positive given it is non-yield bearing.
- Silver is down 1.6% to $47.83 today after a low of $48.008. It fell 6.3% last week but the metal remains overbought. Initial support is at $47.55, 22 October low.
- Risk appetite has improved with the S&P e-mini up 0.7%, Nikkei +2.1% and Hang Seng +1.0%. Oil prices are flat with WTI at $61.53/bbl. Copper is 1.4% higher.
- Later October Dallas Fed manufacturing and October German Ifo survey are released. The ECB’s Elderson and Tuominen speak.
RBA: Bullock May Sound Cautious On Further Easing, Q3 CPI Still Come
RBA's Bullock gives a fireside chat later, at the ABE dinner (7:15pm AEDT). This is the final RBA speak before next Tuesday's monetary policy outcome. It may be the case Bullock stays quite non-committal around easing risks at that meeting (in Bullock's style of not ruling anything in or out). Market pricing is delicately poised, with a 25bps cut around 60% priced per OIS dated RBA contracts for the Nov meet. A full cut is more than priced for the Fed 2026 meeting (but not quite for the Dec meeting this year). The AUDUSD is eyeing a break above 0.6540 (which marks the 50-day EMA), which could then see 0.6600 tested.
- We still have the Q3 CPI print on Wednesday this week, which could see Bullock staying neutral with regards to giving a strong bias this evening. The trimmed mean is expected to show disinflation stalling in Q3 at 2.7%. She mentioned that there are early concerns around services prices and so the market services CPI will be monitored closely.
- September labour market data were the main release since the 30 September decision and showed a 0.2pp rise in the unemployment rate to 4.5%. Monetary policy centered questions may focus on this data but Bullock has said previously that given volatility it is best to focus on the 3-month average which was consistent with a gradual easing in conditions.
- It is worth noting that NAB survey and SEEK vacancy data suggest that the labour market may have stabilised and possibly improved going into Q4.
