Gold Trading Alert: Gold prices rose over 3% in October! But with hawkish pressure from the Fed, this week's data will determine the outcome.
2025-11-03 06:58:29
Gold prices continued their downward trend last week, hitting a low of $3,886 on Tuesday (October 28), a two-week low. However, gold prices rebounded sharply on Thursday, and although they fell slightly on Friday (October 31), spot gold fell 0.5% to close at $4,002.94 per ounce. Nevertheless, gold prices rose 3.7% in October, marking the third consecutive month of gains. Hawkish speeches by several Federal Reserve officials on Friday reduced the probability of a December rate cut, and the dollar index hit a near three-month high, putting pressure on gold prices. However, market sentiment remained cautious, as the US government shutdown was nearing its longest in history and international geopolitical tensions continued to provide support for gold prices.
It should be noted that North America officially began observing winter time on Sunday (November 2nd). The trading hours of major financial instruments in the US and Canadian financial markets, such as gold, silver, US oil, and US stocks, as well as the release times of important economic data, will generally be delayed by one hour compared to daylight saving time.
Specifically, starting Monday, November 3rd: the regular trading session for US stocks will be adjusted to 22:30 to 05:00 Beijing time the following day. Gold, silver, and US crude oil will open at 7:00 Beijing time.
Last Friday, Cleveland Fed President Hamack publicly opposed this week's interest rate cut, stating bluntly that "inflation remains high and policy restraint needs to be maintained." She is set to become a voting member of the FOMC in 2026, and this statement was interpreted by the market as a long-term pessimistic view of the interest rate cut path.
On the same day, Dallas Fed President Logan also joined the fray, stating that "a rate cut this week is unnecessary" and that unless there is a clear deterioration in inflation or employment, a further rate cut in December is unlikely. Kansas City Fed President Schmid even cast the sole dissenting vote at the FOMC meeting, demanding that interest rates remain unchanged.
Federal Reserve Chairman Jerome Powell made a rare hawkish statement after cutting interest rates last Wednesday: "Further rate cuts in December are far from a certainty."
According to the CME FedWatch tool, the probability of a 25 basis point rate cut in December has plummeted from 93% a week ago to 63%, and further dropped to 62% at the close of trading last Friday.
Independent trader Tai Wong succinctly observed: "The public pessimism expressed by three regional Fed presidents has led to an overly optimistic market expectation of interest rate cuts, naturally putting downward pressure on gold prices."
Last Friday, the US dollar index rose 0.35% to 99.82, reaching a high of 99.84 during the session, a new high since August 1st, with a monthly gain of 2%, its best performance since July. The stronger dollar directly increased the cost of purchasing dollar-denominated gold for holders of other currencies.
Meanwhile, the yield on the 10-year U.S. Treasury note rose 0.7 basis points to 4.079% last week, a weekly increase of 1.87%, marking the largest weekly gain since April. Although the two-year yield fell back 1.6 basis points to 3.598% at the close, its weekly increase was also considerable. The yield curve inversion narrowed to positive 48.7 basis points, indicating a recovery in market confidence in a soft landing for the economy.
As a typical non-interest-bearing asset, gold's appeal has significantly decreased in an environment of high interest rates and a strong dollar. Although gold prices have surged 53% this year, reaching a record high of $4,381.21 on October 20, last week's correction was an immediate reaction to the combination of "high interest rates + strong dollar".
The US federal government shutdown has lasted for a month, and the non-farm payroll report scheduled for this week is almost certain to be absent. The Federal Reserve and market participants will have to rely on secondary data from the private sector: Wednesday's ADP private employment report, Thursday's Revelio Labs job growth forecast, and the ISM manufacturing and services PMIs will be the focus this week.
The Bank of Montreal's strategy team warned: "Even after the shutdown ends, private sector data will carry unprecedented weight in the December interest rate decision."
The data vacuum further amplified the impact of the hawkish-dove divide within the Federal Reserve on gold prices. While Fed Governor Waller advocated for further rate cuts in December to support employment, his voice was drowned out by the hawkish camp.
The latest Kitco weekly gold survey shows that Wall Street sentiment is unusually neutral: of the 14 analysts surveyed, 57% expect the market to trade sideways in the coming week, 21% are bullish, and 21% are bearish.
Colin Cieszynski, chief strategist at SIA Wealth Management, stated bluntly, "Gold needs further consolidation."
Rich Checkan, president of Asset Strategies International, warned: "In the short term, we will test below $4,000 again, but this will only be a temporary pullback."
In contrast, on the main street, 64% of the 282 retail votes were bullish, while only 18% were bearish. Forex senior strategist James Stanley optimistically noted, "Gold prices have returned above $4,000, with strong support at $3,895, and the bulls are launching a counterattack."
RJO Futures broker Daniel Pavilonis emphasized: "In the long run, the logic of currency depreciation remains unchanged, and gold, silver, platinum, and palladium have not yet completed their upward trend."
Morgan Stanley released a report last Friday maintaining its bullish stance: benefiting from expectations of interest rate cuts, inflows into gold ETFs, central bank gold purchases, and economic uncertainty, it expects the average gold price to reach $4,300 in the first half of 2026.
In contrast, FxPro senior analyst Alex Kuptsikevich is cautious: "A stronger dollar, rising US Treasury yields, easing US-China relations, de-escalating Middle East conflicts, and slower central bank gold purchases—gold is gradually losing its trump card for rising prices. Similar to the surges in 1979 and 2011, it often enters a long period of consolidation."
Although gold prices continued their downward trend last week, the monthly chart still recorded three consecutive positive months, and the 53% gain this year further demonstrates gold's resilience. However, the hawkish stance of the Federal Reserve, the rise in both the US dollar and US Treasury bonds, and the data vacuum caused by the government shutdown have collectively formed three major obstacles above $4,000. This week, the ISM Manufacturing PMI, ADP employment, the Bank of England's decision, and the Michigan Consumer Sentiment Index will be released in quick succession. If private sector data is weaker than expected, gold prices may take the opportunity to rebound to $4,300; if they remain resilient, $4,000 may be breached again, falling towards the $3,870-$3,800 range.
For investors, remaining on the sidelines in the short term and selectively investing in the $3,800-$4,000 range may be the most prudent choice; while in the long term, the strategic value of gold remains unshaken due to currency depreciation, geopolitical cycles, and central bank gold purchase cycles.
In addition, investors should pay attention to news related to the US government shutdown and speeches by Federal Reserve officials this week.
(Spot gold daily chart, source: FX678)
It should be noted that North America officially began observing winter time on Sunday (November 2nd). The trading hours of major financial instruments in the US and Canadian financial markets, such as gold, silver, US oil, and US stocks, as well as the release times of important economic data, will generally be delayed by one hour compared to daylight saving time.
Specifically, starting Monday, November 3rd: the regular trading session for US stocks will be adjusted to 22:30 to 05:00 Beijing time the following day. Gold, silver, and US crude oil will open at 7:00 Beijing time.
Internal divisions within the Federal Reserve escalate: a three-pronged attack by hawks halve the probability of a December rate cut.
Last Friday, Cleveland Fed President Hamack publicly opposed this week's interest rate cut, stating bluntly that "inflation remains high and policy restraint needs to be maintained." She is set to become a voting member of the FOMC in 2026, and this statement was interpreted by the market as a long-term pessimistic view of the interest rate cut path.
On the same day, Dallas Fed President Logan also joined the fray, stating that "a rate cut this week is unnecessary" and that unless there is a clear deterioration in inflation or employment, a further rate cut in December is unlikely. Kansas City Fed President Schmid even cast the sole dissenting vote at the FOMC meeting, demanding that interest rates remain unchanged.
Federal Reserve Chairman Jerome Powell made a rare hawkish statement after cutting interest rates last Wednesday: "Further rate cuts in December are far from a certainty."
According to the CME FedWatch tool, the probability of a 25 basis point rate cut in December has plummeted from 93% a week ago to 63%, and further dropped to 62% at the close of trading last Friday.
Independent trader Tai Wong succinctly observed: "The public pessimism expressed by three regional Fed presidents has led to an overly optimistic market expectation of interest rate cuts, naturally putting downward pressure on gold prices."
The double whammy of a falling US dollar and US Treasury bonds puts gold's "non-interest-bearing" property under renewed scrutiny.
Last Friday, the US dollar index rose 0.35% to 99.82, reaching a high of 99.84 during the session, a new high since August 1st, with a monthly gain of 2%, its best performance since July. The stronger dollar directly increased the cost of purchasing dollar-denominated gold for holders of other currencies.
Meanwhile, the yield on the 10-year U.S. Treasury note rose 0.7 basis points to 4.079% last week, a weekly increase of 1.87%, marking the largest weekly gain since April. Although the two-year yield fell back 1.6 basis points to 3.598% at the close, its weekly increase was also considerable. The yield curve inversion narrowed to positive 48.7 basis points, indicating a recovery in market confidence in a soft landing for the economy.
As a typical non-interest-bearing asset, gold's appeal has significantly decreased in an environment of high interest rates and a strong dollar. Although gold prices have surged 53% this year, reaching a record high of $4,381.21 on October 20, last week's correction was an immediate reaction to the combination of "high interest rates + strong dollar".
Government shutdown exacerbates data vacuum: Private sector data becomes a "lifeline"
The US federal government shutdown has lasted for a month, and the non-farm payroll report scheduled for this week is almost certain to be absent. The Federal Reserve and market participants will have to rely on secondary data from the private sector: Wednesday's ADP private employment report, Thursday's Revelio Labs job growth forecast, and the ISM manufacturing and services PMIs will be the focus this week.
The Bank of Montreal's strategy team warned: "Even after the shutdown ends, private sector data will carry unprecedented weight in the December interest rate decision."
The data vacuum further amplified the impact of the hawkish-dove divide within the Federal Reserve on gold prices. While Fed Governor Waller advocated for further rate cuts in December to support employment, his voice was drowned out by the hawkish camp.
Wall Street is neutral, while retail investors are bullish: A Kitco survey reveals a stark contrast.
The latest Kitco weekly gold survey shows that Wall Street sentiment is unusually neutral: of the 14 analysts surveyed, 57% expect the market to trade sideways in the coming week, 21% are bullish, and 21% are bearish.
Colin Cieszynski, chief strategist at SIA Wealth Management, stated bluntly, "Gold needs further consolidation."
Rich Checkan, president of Asset Strategies International, warned: "In the short term, we will test below $4,000 again, but this will only be a temporary pullback."
In contrast, on the main street, 64% of the 282 retail votes were bullish, while only 18% were bearish. Forex senior strategist James Stanley optimistically noted, "Gold prices have returned above $4,000, with strong support at $3,895, and the bulls are launching a counterattack."
RJO Futures broker Daniel Pavilonis emphasized: "In the long run, the logic of currency depreciation remains unchanged, and gold, silver, platinum, and palladium have not yet completed their upward trend."
Institutional divergence: Morgan Stanley is bullish on 4300, while FxPro warns of a consolidation period.
Morgan Stanley released a report last Friday maintaining its bullish stance: benefiting from expectations of interest rate cuts, inflows into gold ETFs, central bank gold purchases, and economic uncertainty, it expects the average gold price to reach $4,300 in the first half of 2026.
In contrast, FxPro senior analyst Alex Kuptsikevich is cautious: "A stronger dollar, rising US Treasury yields, easing US-China relations, de-escalating Middle East conflicts, and slower central bank gold purchases—gold is gradually losing its trump card for rising prices. Similar to the surges in 1979 and 2011, it often enters a long period of consolidation."
Conclusion: The $4,000 mark is a critical level; this week's data will determine the outcome.
Although gold prices continued their downward trend last week, the monthly chart still recorded three consecutive positive months, and the 53% gain this year further demonstrates gold's resilience. However, the hawkish stance of the Federal Reserve, the rise in both the US dollar and US Treasury bonds, and the data vacuum caused by the government shutdown have collectively formed three major obstacles above $4,000. This week, the ISM Manufacturing PMI, ADP employment, the Bank of England's decision, and the Michigan Consumer Sentiment Index will be released in quick succession. If private sector data is weaker than expected, gold prices may take the opportunity to rebound to $4,300; if they remain resilient, $4,000 may be breached again, falling towards the $3,870-$3,800 range.
For investors, remaining on the sidelines in the short term and selectively investing in the $3,800-$4,000 range may be the most prudent choice; while in the long term, the strategic value of gold remains unshaken due to currency depreciation, geopolitical cycles, and central bank gold purchase cycles.
In addition, investors should pay attention to news related to the US government shutdown and speeches by Federal Reserve officials this week.
(Spot gold daily chart, source: FX678)
- Risk Warning and Disclaimer
- The market involves risk, and trading may not be suitable for all investors. This article is for reference only and does not constitute personal investment advice, nor does it take into account certain users’ specific investment objectives, financial situation, or other needs. Any investment decisions made based on this information are at your own risk.
