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GOLD: Risk-Off & US Easing Expectations Assist Gain

GOLD
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Gold is 0.2% higher in today’s Asia-Pac session, after closing 0.5% higher at $2662.58 on Tuesday.

  • The US Treasury curve bull flattened in post-holiday cash trading on Tuesday, with futures extending the rebound from Monday's lows. A sharp drop in oil prices starting late Monday on an apparent de-escalation in Iran-Israel tensions helped underpin a solid rally in the front US Treasury futures contract. WTI front futures fell 3.8% on Tuesday.
  • A risk-off tone in equities also helped support November Fed rate cut pricing, for which Fed Funds futures extended to a post-Oct 7 high (implying ~98% of a 25bp cut, vs ~88% Monday).
  • On that note, SF Fed's Daly reiterated it was a "reasonable thing" to cut one or two more times by the end of the year - overall a relatively cautious tone, in keeping with Monday's appearance by Gov Waller.
  • Lower rates are typically positive for gold, which doesn’t pay interest.
  • According to MNI’s technicals team, the recent short-term retracement in gold appears to have been a correction. The trend condition is unchanged and remains bullish. A continuation of gains would refocus attention on $2,690.2, a Fibonacci projection. Firm support lies at $2,626.9, the 20-day EMA.
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Gold is 0.2% higher in today’s Asia-Pac session, after closing 0.5% higher at $2662.58 on Tuesday.

  • The US Treasury curve bull flattened in post-holiday cash trading on Tuesday, with futures extending the rebound from Monday's lows. A sharp drop in oil prices starting late Monday on an apparent de-escalation in Iran-Israel tensions helped underpin a solid rally in the front US Treasury futures contract. WTI front futures fell 3.8% on Tuesday.
  • A risk-off tone in equities also helped support November Fed rate cut pricing, for which Fed Funds futures extended to a post-Oct 7 high (implying ~98% of a 25bp cut, vs ~88% Monday).
  • On that note, SF Fed's Daly reiterated it was a "reasonable thing" to cut one or two more times by the end of the year - overall a relatively cautious tone, in keeping with Monday's appearance by Gov Waller.
  • Lower rates are typically positive for gold, which doesn’t pay interest.
  • According to MNI’s technicals team, the recent short-term retracement in gold appears to have been a correction. The trend condition is unchanged and remains bullish. A continuation of gains would refocus attention on $2,690.2, a Fibonacci projection. Firm support lies at $2,626.9, the 20-day EMA.