Watch the gold price trend, there is a chance to set a new record at $2080 per ounce. After the war between Israel and Hamas, the price rose to more than $165, while the Fed’s money management continues to create profit-selling pressures. Until there is an expected interest rate cut in May next year. Meanwhile, the public image of the People’s Bank of China leading the central bank team is to continuously accumulate gold for reserves. It becomes an incentive for prices to continue rising.
In light of this atmosphere, it must be recognized that “gold” is considered one of the most important assets. Which investors tend to pay more attention to given the global situation that currently faces many risks. Especially the war between Israel and Hamas in Palestine, which is considered one of the important factors that push the price of gold to rise continuously during this period.
At the same time, there is another factor that affects the price of gold during this period. There is no escape from the results of the US Federal Reserve meeting. (Federal Reserve) The last time (November 1) the Fed announced to keep short-term interest rates at 5.4%, and this is the second time in a row that the Fed has not raised interest rates. But the matter remains open to the possibility of raising interest rates next time. If inflation rises in the next few months
He claims that interest rates will remain high after the US economy expands.
The Federal Reserve confirmed it will keep its benchmark interest rate at 5.4%, the highest level in 22 years, to fight inflation. This year, the Fed has raised interest rates only once, in May. Ready to provide information about maintaining high interest rates because the US economy expanded rapidly in the third quarter between July and September. Employment rates remain strong, however, there may be further interest rate increases in the future. If it is deemed necessary
Meanwhile, the Fed sees recent turmoil in US financial markets pushing interest rates on 10-year Treasuries to their highest level in 16 years, pushing up lending rates across the system. This helps achieve the Fed’s goal of reducing overheating in the economy. Including relieving pressure on inflation.
Send the termination signal again.
The other interesting point is that Jerome Powell, Chairman of the Federal Reserve, said that the Fed is close to ending its high interest rate policy. But it has been observed that interest rates are rising rapidly. It helps reduce inflation without having to raise interest rates further. It also confirms the continued decline in wage growth. This helps mitigate inflation in another way as well.
Despite signs of stabilization in inflation in the latest data, there is still a tendency for inflation to decline. This led to the Federal Reserve announcing that it would not raise interest rates. Pushing the US stock market higher. At the same time, bond yields fell. Because investors interpreted that the Fed might raise interest rates again. As a final note before interest rate cuts happen next year.
US interest rates are expected to start falling in May next year.
Investors expect that the Fed will keep interest rates steady at its December meeting after it released lower-than-expected employment numbers. This will be a factor in slowing the Federal Reserve’s interest rate increase. The Fed will then cut interest rates in May 2024, which is faster than the June 2024 rate cut was originally expected.
In addition, investors expect that the Fed will continue to keep interest rates at 5.25-5.50% at the monthly meeting. January and March next year before cutting interest rates by 0.25% to 5.00-5.25% at the May meeting.
Demand for gold remains strong
Meanwhile, there is a report from the World Gold Council stating that in the third quarter of last, gold continued to receive support from gold purchases by central banks that remained at record levels. Bringing the quarterly demand (excluding over-the-counter trading) to 1,147 tons, 8% higher than the five-year average.
In the past third quarter, gold purchases by various central banks were considered the strongest, and it is expected that the rush of central bank governors to buy gold will not subside until the end of the year. This will help reflect that overall annual gold purchases will be stronger again this year. Amidst the trend of rising interest rates and a strengthening US dollar.
China and Russia are chasing gold non-stop.
At the same time, what helps confirm that the World Gold Council report has weight is that news of the accumulation of gold in central banks begins with the Reserve Bank of Singapore, which is currently the third largest buyer of gold in the world in the first nine months of the current year. It is second only to the People’s Bank of China, which bought the most. Followed by the Polish Central Bank.
According to the data, during the third quarter, the Reserve Bank of Singapore purchased 4 tons of gold from the market, bringing the total purchases of gold this year to 75 tons. As for the People’s Bank of China, the People’s Bank of China was the largest buyer of gold in the third quarter by 78 tons, bringing its holdings to an increase. of gold by 181 tons since the beginning of the year, bringing its total accumulated holdings to 2,192 tons.
The National Bank of Poland continued to purchase gold, increasing by 57 tons, bringing its gold total this year by 105 tons, while Russia is another country that collected significantly more gold. Russia’s current gold reserves reached a record high of 2,360 tons in September. In the past, it rose by 44 tons, or 2%, to rank fifth in the world in terms of gold reserves.
These things show that Various central banks There is a continuing focus on the benefits that gold can bring to a country’s reserves. Whether it’s diversification, downside risk protection, or liquidity, it’s because of gold. It is considered a safe asset. It helps diversify the reserves of different central banks. It is responsible for the country’s main currency, the value of which may change.
Gold has an opportunity at $2,080.
However, Beravong Wiriankroh, Senior Researcher, OSIRIS Intelligence Division, OSIRIS Limited, assessed the trend of gold prices during November from the situation of maintaining high interest rates by the Fed and the war between Israel and Hamas. This could lead to gold prices surpassing the $2010 level and possibly peaking again at $2080 if signs of war spread. But if the war eases tensions, gold prices may face selling pressure and achieve significant gains. The same thing has happened with wars between Ukraine, Russia and other countries in the past.
After last October, the price of gold continued to rise throughout the month and achieved a new high, the highest in 5 and a half months, at US$2,009 (referred to on September 27), in addition to an 8.7% increase at US$2,005 compared to the end of September. At the level of $1,848
The main reason behind this was the tense situation in the Middle East. This caused the price to rise to around $165 despite pressure from the rising US dollar. This was the strongest in 11 months and the US 10-year bond yield rose to its highest levels in 17 years as investors bought the dollar as a safe-haven currency after the head of the Federal Reserve indicated a move to continue raising interest rates. The inflation rate did not fall as expected. The target is expected to be 2%. The Fed may have the opportunity to raise interest rates again in the fourth quarter of this year. It may keep the interest rate at a high level for a longer period.
As for the price of gold in the country, which rose to the highest level in history. Gold bullion prices recorded 96.5%, with the highest selling price reaching 34,250 baht per baht, and the highest selling price of gold jewelry reaching 34,750 baht per baht, an increase of 3.6% compared to the highest selling price of the previous month.
For factors affecting the price of gold in November. This means that the Fed may change its view on raising interest rates to higher levels. To reduce inflation, which has no tendency to decline, which has a negative impact on the price of gold. Next comes the release of non-farm payrolls numbers in the US (November 6), which will reflect the strength of the labor market. If employment numbers come in well this may increase the likelihood of the Fed continuing to raise interest rates. But if the outcome is bad, it could increase the likelihood that the Fed will postpone raising interest rates at its next meeting. It is considered a positive factor for gold prices.
There is also a report on the Core Consumer Price Index (CPI) to be announced on November 14, along with the latest US inflation rate. For September it remains stable at 3.7%, making the current overall inflation number still far from the Fed’s 2% target, so it should be watched to see if October’s inflation numbers change in any direction. It is estimated that it will remain above 3.5%, which is considered a supportive factor for an interest rate increase by the Fed. Or maintaining interest rates at a high level for a longer period of time and this will be a negative factor on the price of gold.
At the end of the month, on November 22, there will be another meeting of the Federal Reserve’s Monetary Policy Committee (FOMC) where the economic direction will be discussed. Recommending trends in future monetary policy operations. If there is a signal to delay the interest rate increase or stop the interest rate increase, gold will immediately receive positive factors. But if it signals the need for further interest rate increases or maintaining high interest rates for a longer period of time, gold will immediately receive negative factors from these factors.
Additionally, on November 30, watch the US Personal Consumption Expenditures Price Index. This does not include food and energy categories. November Monthly Osiris estimated that the price index of consumption expenditures should reflect US inflation which is likely to remain stable at a high level. If this is as expected, it will increase the chance that the Fed will raise interest rates at least one more time or may keep interest rates at a high level for a longer period. It is considered a negative factor for gold prices.
Watch the big uptrend for ‘Gold’.
Pawan Nuwattanasap, CEO of YLG Bullion International Company Limited (YLG), said that with the announcement of the interest rate maintenance policy by the RBI and as a result, the gold price trend has started to gain purchasing power again. After that, there was strong selling pressure to make a profit. Among the news of the unrest between Israel and the Hamas movement, which prompted the price of gold to rise by approximately 8-10% since the day of the conflict.
However, although the Fed Chairman said that interest rate policy should be taken into account in line with the goal of lowering inflation to 2%, this round of the Fed’s interest rate increase cycle has come a long way. It is approaching the end of the cycle of raising interest rates, as it is noted that in the short term gold may fluctuate from selling to make a profit from stable prices at a high level, but in the long term for a period of 2-3 months, when interest rates enter a downward trend, there will be a significant rise. In gold.
Meanwhile, although in the short term gold did not get full positives from the interest rate issue. But gold remains a safe asset for investment around the world. Recently, central banks around the world announced purchases of gold in the first nine months of 2023. It was found that central banks around the world purchased up to 800 tons of gold, an increase of 14% over the same period last year. The People’s Bank of China took the lead in buying gold in the first nine months of the year. While various countries try to hedge against inflation by accumulating gold and reducing your dependence on the dollar.
This factor helped gold prices resist the rise in US bond yields. YLG believes that rising bond yields will lead to more money flowing into the bond market. When purchasing power increases, it will pressure the bond yield of the instrument to adjust downward. This trend is considered to add support to the price of gold as well.
For investors who want to invest in gold during this period. A short-term recommendation and it was traded within the support range of $1,953-1,971, and the resistance level of $2,003-2,021, while 96.5% of local gold bullion was traded within the support range. 33,300-33,600 baht gold, resistance 34,200-34,500 baht
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