Powell leaves gold bulls in tears, focus on whether gold price can hold key support at 1940
On Friday, November 10, as European markets opened, the market maintained a downward trend. Hawkish remarks from Federal Reserve Chairman Powell led investors to re-price rate cut bets. The dollar remained largely stable, while gold continued to trade in a narrow range, falling nearly $40 so far this week, potentially marking its largest weekly decline since late September. Gold prices fell on Friday, marking a second consecutive week of declines, weighed down by a stronger dollar and Treasury yields, following hawkish comments from Fed Chair Powell. After three consecutive days of heavy losses, spot gold barely managed to halt its decline yesterday, closing above $1950. It continued to fluctuate within a narrow range of $1950-1960, with the market awaiting further clues. Gold prices have fallen 1.9% so far this week, potentially marking their largest weekly decline in over a month. Hugo Pascal, a precious metals trader at InProved, said: "Gold has been consolidating below $2000 since early November last year, having previously broken through that level. However, as long as gold remains above $1900, I remain optimistic about the outlook for the end of the year." The dollar is poised for its best weekly performance in three months, after Fed Chair Powell and several other Fed officials poured cold water on market expectations that US interest rates have peaked. Fed officials, including Powell, said on Thursday that they remain uncertain whether interest rates are high enough to end the fight against inflation, undermining market expectations that US interest rates have peaked. Powell said at a panel discussion hosted by the International Monetary Fund (IMF) that it is necessary to avoid being misled by a few months of good data and to address the risks of over-tightening. He expressed concern about the risk that strong growth could derail the disinflation process, potentially requiring a monetary policy response. Powell believes that US inflation has fallen but remains well above the 2% target. He reiterated that the Fed is still unsure whether the current level of tightening is sufficient to bring inflation back to the 2% target, saying there is still a long way to go. Authorities are still trying to determine whether more action is needed and then consider how long to keep rates high. He also noted that the US labor market remains tight but is moving toward a better balance; economic growth is expected to slow in the coming quarters, but this remains to be seen. Powell said that further progress on inflation may require tighter monetary policy, not just supply-side improvements; the Fed will begin its next framework review in the second half of next year. Following Powell's remarks, the benchmark 10-year Treasury yield rose from a more than one-month low, reducing the appeal of non-yielding gold to investors. "Powell's speech was quite hawkish, which really hit market sentiment," said Tina Teng, market analyst at CMC Markets. A week before Fed officials made the above remarks, the central bank kept interest rates unchanged, solidifying expectations that rates may have peaked, leading to a subsequent sharp drop in the dollar and US Treasury yields. However, the dollar has regained its footing this week, and is poised for a weekly gain of about 1.3% against the yen, its best performance since August last year. Traders have moved forward their bets on the Fed's first rate cut from May to June next year. Higher interest rates increase the opportunity cost of holding gold, which does not generate interest. Meanwhile, the dollar index is on track for its biggest weekly gain in over three months, making gold, which is priced in other currencies, more expensive. Ilya Spivak, head of global macro at Tastylive, said: "Technically, $1940 seems to be a very important support level for gold. If this level is broken, we will face another test of $1900." Palladium prices fell 1.7% to $975 an ounce, their lowest level since 2018, and are set for their worst week in 11 months.
Time:
2023-11-12 09:00
On Friday, November 10th, during the European market opening, the market maintained a downward trend. Hawkish remarks from Federal Reserve Chairman Powell caused investors to re-price rate cut bets. The dollar remained largely stable, while gold continued to trade in a narrow range, falling nearly $40 so far this week, potentially marking its largest weekly decline since late September.
Gold prices fell on Friday, marking a second consecutive week of declines, weighed down by a stronger dollar and Treasury yields following hawkish comments from Fed Chair Powell.
After three consecutive days of heavy losses, spot gold managed to halt its decline yesterday, closing above $1950. It continued to trade within a narrow range of $1950-1960, with the market awaiting further clues.
Gold prices have fallen 1.9% so far this week, potentially marking their biggest weekly drop in over a month.
Hugo Pascal, precious metals trader at InProved, said: "Gold has been consolidating below $2000 since early November last year, having previously broken above that level. However, as long as it stays above $1900, I remain optimistic about the outlook for the end of the year."
The dollar is poised for its best weekly performance in three months after Fed Chair Powell and several other Fed officials poured cold water on market expectations that US interest rates have peaked.
Fed officials, including Powell, said on Thursday that they remain uncertain whether rates are high enough to end the fight against inflation, dampening market expectations that US interest rates have peaked.
Powell, speaking at a panel discussion hosted by the International Monetary Fund (IMF), said that it is necessary to avoid being misled by several months of good data, while also addressing the risks of over-tightening. He expressed concern about the risk that strong growth could derail the disinflation process, potentially requiring a monetary policy response.
Powell believes that US inflation has fallen but remains well above the 2% target. He reiterated that the Fed is still unsure whether the current level of tightening is sufficient to bring inflation back to the 2% target, stating that there is still a long way to go. Authorities are still trying to determine whether further action is needed and then considering how long to keep rates high.
He also noted that the US labor market remains tight but is moving toward a better balance; he expects economic growth to slow in the coming quarters, but this remains to be seen.
Powell said that further progress on inflation may require tighter monetary policy, not just improvements on the supply side; the Fed will begin its next framework review in the second half of next year.
Following Powell's remarks, the benchmark 10-year Treasury yield rose from a more than one-month low, reducing the appeal of non-yielding gold to investors.
"Powell's speech was quite hawkish, and it really hit market sentiment," said Tina Teng, market analyst at CMC Markets.
A week before the Fed officials made the above remarks, the central bank kept interest rates unchanged, solidifying expectations that rates may have peaked, leading to a subsequent sharp drop in the dollar and US Treasury yields.
However, the dollar has regained its footing this week, and is poised for a weekly gain of about 1.3% against the yen, its best performance since August last year.
Traders have brought forward their bets on the Fed's first rate cut from May to June next year. Higher interest rates increase the opportunity cost of holding gold, which does not generate interest.
Meanwhile, the dollar index is on track for its biggest weekly gain in over three months, making gold more expensive for holders of other currencies.
Ilya Spivak, head of global macro at Tastylive, said: "Technically, $1940 seems to be a very important support level for gold. If this level is broken, we will face another test of $1900."
Palladium prices fell 1.7% to $975 an ounce, their lowest level since 2018, and are set for their worst week in 11 months.
Related News
Gold prices continue to fluctuate.
Gold prices have shown a volatile pattern in the short term, affected by the weakening of the US dollar and changes in sentiment due to easing geopolitical tensions.
Gold prices rise again! Multiple risks fuel safe-haven demand.
From the perspective of the international market, the tense situation in the Middle East, the escalation of the Russia-Ukraine conflict, and the continued high uncertainty surrounding the US Trump administration's tariff policies have driven up gold prices due to increased risk aversion in the market. Furthermore, a significant recent change in the gold market is that gold has become the second-largest reserve asset for central banks globally. How should the future trend of gold prices be viewed? Several analysts have indicated that in the short term, gold prices may fluctuate due to factors such as tariff easing and sudden changes in the geopolitical situation; in the medium to long term, gold prices are still in an upward channel.
As the Russia-Ukraine conflict enters its third year, global attention is once again focused on this geopolitical crisis. According to Dow Jones Newswires, US President Donald Trump made startling remarks at the White House on Thursday (June 5), stating that neither Russia nor Ukraine is prepared for peace, and that both sides may "continue fighting" until one side is willing to compromise. This statement not only signals the failure of his attempts to broker peace, but also introduces new uncertainty to the global geopolitical and economic markets.
Recently, good news came from the China Machinery Metallurgy and Building Materials Workers' Technical Association. In the 2025 National Machinery Metallurgy and Building Materials Industry Workers' Technological Innovation Achievement Award, Shandong Guoda Gold Co., Ltd.'s "Purification of Crude Arsenic Flue Dust to Produce Arsenic Trioxide Industrial Application" and "Key Technology Application for High-Value Utilization of Complex Copper-Gold Ore Resources" projects won the first prize and the second prize respectively. This honor is a high recognition of the workers' technological innovation ability and the effectiveness of achievement transformation, and also fully demonstrates the company's outstanding strength in the industry.
Gold prices return to $3300! Wall Street banks show significant divergence in long-term outlook
In fact, as gold prices fluctuate, Wall Street's major banks have recently shown a clear divergence in their views on gold prices. Unlike Goldman Sachs and Deutsche Bank, which are optimistic about gold's performance, Citigroup believes that the long-term outlook for gold prices is not optimistic.
Although gold prices rose this week, market volatility has clearly increased. While the US-UK agreement is symbolic, its content is limited and insufficient to alleviate concerns about a global economic slowdown. Therefore, gold prices will continue to fluctuate between safe havens and policy signals, closely monitoring the Federal Reserve's interest rate expectations and global trade sentiment.