Gold trading reminder: The Federal Reserve's vague statement weighed on the dollar, and gold prices rose to a nearly three-month high

On Thursday (October 19), the dollar fell as Federal Reserve Chairperson Jerome Powell reiterated his stance that interest rates must remain higher for longer, lacking immediate support for November rates, and the gold market continued to trade near intraday highs.

(Spot gold trend chart)

Spot gold closed up 1.37% on Thursday at $1974.15 an ounce, returning to its highest level since mid-July.

COMEX December gold futures closed up nearly 0.62% at $1980.50 an ounce.

COMEX February gold futures closed up about 0.61% at $2000.20 an ounce.

COMEX December silver futures closed down 0.29% at $23.031 an ounce.

COMEX January silver futures closed down 0.29% at $23.157 an ounce.

[Market News Analysis]

The risk that the war in the Middle East could intensify and affect the world economy has also prompted more investors to turn to safe-haven assets, driving gold higher. #Israeli-Palestinian Conflict #

After three days of gains, COMEX December gold has rallied more than 2% this week and more than 5% the previous week.

Ed Moya, an analyst at online trading platform OANDA, said that while Powell's comments weighed on the dollar and gold prices were boosted, the escalating Israeli-Palestinian conflict also provided clear support. "Volatility is expected to remain high in the region, which should keep gold prices around the $2,000 level," Moya added.

The dollar fell, making dollar-denominated commodities more affordable for international buyers after Powell failed to signal a rate hike by the Federal Reserve in his Nov. 2 interest rate decision.

"Inflation is still too high," Powell said in a speech, answering questions raised at an event held at the Economic Club of New York. He added: "The risk right now remains high inflation. It's possible that we could enter a more inflationary period, but it's hard to know. It could be that interest rates aren't high enough. But the Fed chairperson can't hide his surprise at how the Fed is doing with its sharp rate hikes and the relative inflation problems that result, but the U.S. economy itself.

Analysts have pointed out that the gold market has digested a lot of bad news, and the Federal Reserve should not bring the same headwinds to the precious metals as it approaches the end of its tightening cycle.

Analysts noted that not only did gold return to its stunning $2,000-an-ounce level, but the rally was even more impressive given the level of bond yields. The 10-year Treasury yield hit its highest level since July 2007 at 5%.

Analysts point out that as the world faces two major conflicts and political uncertainty continues to rise, the highly negative correlation between gold and bond yields has been broken. In addition to the Russian-Ukrainian crisis, many political analysts are waiting to see if the Israeli-Palestinian conflict will cause further chaos and instability in the Middle East.

Edward Moya, senior market analyst at OANDA, said: "Volatility is expected to remain high in the region, which should keep gold around $2,000 an ounce."

Some analysts say gold could remain an attractive asset as concerns over U.S. debt continue to grow. That sentiment could drive more investors away from the bond market, pushing yields higher. Markets are increasingly concerned that the Federal Reserve could lose control of the yield curve, which would force them to start buying bonds and expanding their balance sheets.

Kitco.com senior market analyst Jim Wyckoff said, "Gold bulls are relieved that Fed Chairperson Jerome Powell's speech today at the Economic Club of New York was not seen as more hawkish."

Sean Lusk, co-head of commercial hedging at Walsh Trading, told Kitco News that if there is a big sell-off in the stock market, then all bets are off. "" I think metals are likely to outperform the market because they are not going to be a loss leader. Lusk said gold is well-positioned to ride the recent wave of higher oil prices and safe-haven buying. "They've run together before, which is not unusual," he said. "But if oil collapses, the reason for oil collapses is that inflation is out of control, and now economic activity is falling."

[Focus on financial data and events on Friday (Beijing time) ]

Scheduled European Union-US Summit

② 07:30 Japan's September core CPI annual rate

③ 08:00 US President Biden delivers a speech on the Israeli-Palestinian conflict and the Russian-Ukrainian conflict

④ 09:15 China to October 20 one-year loan market quotation rate

⑤ 14:00 Germany September PPI monthly rate, UK September quarterly adjusted retail sales monthly rate

14:35 Bank of Japan Governor Kazuo Ueda delivers a speech

8:30 PM Canadian Retail Sales Monthly Rate in August

21:00 Federal Reserve Harker Addresses the Economic Outlook

The next day at 01:00, the total number of oil rigs in the week from the United States to October 20