GOLD: Gold Halves O/N Gains, Eyes Strong Week Ahead of NFP

RBA-dated OIS pricing is 1–8bps firmer across meetings today, extending yesterday’s post-press conference sell-off.

• Relative to pre-RBNZ levels yesterday, pricing is now 5–13bps firmer, led by late-2026 meetings.
• Markets are pricing a steady build-up in tightening risk, with the implied probability of a 25bp hike rising from 38% in February to 102% by May and 205% by November 2026.
• The spread between the 1-year forward 3-month swap (1Y3M) and the 3-month rate—often used as a proxy for policy expectations a year ahead—has increased by more than 150bps since April, underscoring the magnitude of the shift in rate expectations.

Figure 1: 1Y3M Swap Rate Vs. 3M Swap Rate

Source: Bloomberg Finance LP / MNI

Ethereum had a range overnight of $3094.55 - $3397.82, Asia is trading around $3295, -0.20%. Ethereum rallied strongly in the New York session, price action for Crypto stood out as the USD is rallying at the same time as we approach the FOMC. Ethereum is still technically in a bear market and it will need a few more sessions like that to turn the trend around, though the price action is constructive. The sell-zone to potentially fade remains in the $3550-$3850 area, which could see sellers return initially. This resistance needs to hold to have another test back towards the lows again at some point.

• Andreas Steno Larsen on X: “I remain convinced that 2026 will bring a significant expansion in broad money. A shift is underway from the Fed toward “private channels”
• If he is correct that would set up the platform for Crypto recover and benefit from the increased liquidity.
• Hedgie on X: “Everyone's waiting for the Fed decision Wednesday, with 90% odds of a rate cut priced in. If Powell signals more easing ahead, Bitcoin might attempt $93,000-$95,000. A hawkish surprise could send it back toward $88,000 fast.”
• Ethereum’s Average True Range(ATR) for the last 10 Trading days: $171 

Fig 1: Ethereum spot Daily Chart

Source: MNI - Market News/Bloomberg Finance L.P

• October CPI climbed back to positive at +0.2% after 2 consecutive months of deflation and was in line with forecasts of a further increase to +0.7% in November, representing the highest reading since February 2024 with core rising +1.2%.  
• PPI however is where deflationary pressures are most entrenched with forecasts for a -2.0% in November not met and PPI declined -2.2%.
• The anti-involution policies enacted to curb price wars seem likely to remain in place for some time with limited expectations for improvements in PPI.
• PPI has now printed negative each month since September 2022.
• Bond futures have edged higher this morning, post the injection during the OMO and the CPI.