Gold trading reminder: Gold prices fell slightly but the weekly line is still three consecutive positive, with interest rate cut expectations and the situation in the Middle East providing su

In the early Asian session on Monday (September 30), spot gold fluctuated in a narrow range and is currently trading at $2,662.36 per ounce. Gold prices fell 0.5% last Friday. After the release of the US PCE data, some bulls took profits, dragging down the gold price trend. As the United States began to implement loose monetary policies, boosting the attractiveness of non-interest-bearing gold, gold prices have set new historical highs in recent trading days, and the weekly line still closed higher, with three consecutive negative weekly lines. The third quarter is expected to be the best quarter in more than eight years.

In addition, the escalation of the conflict in the Middle East also provides safe-haven support for gold prices.

Gold prices closed at $2,658.76 per ounce last Friday, after setting a record high for four consecutive trading days. Last Thursday, gold prices hit a record high of $2,685.42.

U.S. gold futures closed down 0.9% last Friday, with a settlement price of $2,668.1. Gold, a traditional hedge against geopolitical and economic uncertainty, has risen about 14% this quarter, its strongest performance since the first quarter of 2016, and is up about 28% so far this year, its biggest gain in 14 years.

Speculative demand pushed gold to "oversold" technical levels after the Federal Reserve cut interest rates by half a percentage point last week, as markets bet on more rate cuts to come. Even so, some banks expect gold prices to still have the potential to rise to $3,000.

"It's very possible to hit $3,000 an ounce this year," said Phillip Streible, chief market strategist at Blue Line Futures. "There are a lot of things that could give the market a boost."

"You could see a breakdown in Middle East peace talks, the labor market could continue to deteriorate, the Federal Reserve could cut rates by another 50 basis points, and Asia's big countries could add more stimulus, all of which would support the gold market," Streible added.

Silver prices surged last week on spillover from gold, but some analysts warned that the gains could fade.

Spot silver hit its highest point since December 2012, $32.71, last Thursday, and fell 1.15% last Friday, but still rose 1.54% on a weekly basis, marking the third consecutive week of gains.

The U.S. September non-farm payrolls report will be released this week, and investors need to pay close attention. In addition, they need to pay close attention to news related to the geopolitical situation, and pay attention to the performance of global stock markets and changes in risk aversion.

This trading day, we need to pay attention to the speech delivered by Federal Reserve Chairman Powell at the National Association for Business Economics.

In Kitco News' gold trend survey, a total of 14 analysts participated, and the survey results showed that Wall Street analysts had a split view on gold. 43% of analysts are bullish, 43% are bearish, and the remaining 14% believe that gold will go sideways. In Kitco's online survey, 192 retail investors participated in the vote, of which 62% expected gold prices to rise, 20% expected a fall, and the remaining 17% believed that gold prices would remain sideways.

Israel kills Hezbollah leader Nasrallah

Israel has killed Hezbollah leader Nasrallah in a powerful airstrike on Beirut, dealing a heavy blow to the Iran-backed militant group, which is reeling from escalating Israeli attacks.

The Israeli military said on Saturday that it had killed Nasrallah in an attack on the group's central command headquarters in a southern suburb of Beirut on Friday. Hezbollah confirmed that Nasrallah had been killed but did not specify the circumstances.

Israeli Prime Minister Benjamin Netanyahu called the killing of Nasrallah a necessary step to "change the balance of power in the region in the coming years."

U.S. President Joe Biden called the killing of Nasrallah an act of justice for the many victims, including thousands of Americans, Israelis and Lebanese, and said the United States fully supports Israel's right to self-defense.

But asked if an Israeli ground invasion of Lebanon was inevitable, Biden told reporters on Saturday: "It is time for a ceasefire."

After Nasrallah was killed, Iran's Supreme Leader Ayatollah Ali Khamenei was moved to a safe location inside Iran, sources said.

In a statement, Hezbollah said it would continue to fight Israel "in support of Gaza and Palestine and in defense of Lebanon and its steadfast and glorious people."

Khamenei said Nasrallah's death would be avenged and other militants would follow his path of struggle against Israel.

Lebanon's caretaker Prime Minister Mikati said his country was under threat but made no mention of Nasrallah's death. His office later declared three days of mourning for Nasrallah.

Hezbollah did not immediately indicate who would succeed Nasrallah. Senior Hezbollah official Hashem Safieddine has been seen as the heir apparent. The group has not made any statements about Safieddine or other Hezbollah leaders besides Nasrallah since the attack.

The escalation has heightened concerns that the conflict could get out of control and potentially involve Iran and the United States.

Israeli Defense Minister Galant said Israel's war is not against the Lebanese people, calling Nasrallah "a murderer of thousands of Israelis and foreign citizens." Galant's office said Galant held consultations on Saturday evening to discuss the possibility of expanding Israel's military offensive on the northern front.

Biden said the US goal is to ease the conflict in Gaza and Lebanon through diplomatic means.

Iran's permanent representative to the United Nations, Iravani, sent a letter to the UN Security Council on the 28th, calling on the Security Council to hold an emergency meeting. Iravani said in the letter that Israel, with the support of the United States, has invaded Lebanon, which seriously threatens regional and world peace and security and violates the UN Charter and international law. Iran strongly condemned this.

Iran called on the Security Council to take immediate and decisive action to stop Israel's ongoing aggression and avoid dragging the region into a full-scale war. Iran also warned that it would not tolerate attacks on its diplomatic facilities and personnel. Iran will not hesitate to exercise its inherent rights under international law and take all measures to defend its important national and security interests.

On the evening of the 29th local time, the Israeli Defense Forces announced that in the past few hours, the Israeli army attacked dozens of Hezbollah strongholds in Lebanon, including rocket launchers used to attack the northern Israeli town of Sde Eliezer earlier today, and buildings where Hezbollah stored weapons. The Israeli army said it was continuing to take action to weaken Hezbollah's military power.

Data released by the Lebanese Ministry of Public Health on the 29th showed that Israel's attacks on several areas in eastern and southern Lebanon that day had killed at least 57 people and injured 105 people. Data showed that Israel's air strikes on the eastern Lebanese province of Baalbek-Hilmil had killed 21 people and injured 47 people; air strikes on the southern village of Ain Derb killed 32 people and injured 53 people, and attacks on the southern town of Ankun killed 4 people and injured 5 people.

Lebanese Prime Minister Mikati said at a press conference on the 29th that the number of people displaced in Lebanon due to the Israeli attack may reach 1 million.

US consumer spending shows resilience and inflation continues to fall

The increase in US consumer spending in August was slightly lower than expected, but this did little to change people's expectations for continued solid economic growth in the third quarter, while the year-on-year price increase fell to the smallest in more than three and a half years.

Other data released by the US Commerce Department on Friday showed that the narrowing of the goods trade deficit last month was the largest in nearly two years, which strengthened expectations of strong economic growth this quarter. The data suggested that trade may cause a small drag on gross domestic product (GDP), which may be overshadowed by the boost from increased inventories.

Economists believe that these data are not weak enough to force the Federal Reserve to cut interest rates by another 50 basis points in November as investors hope, and the high savings rate and still strong wage growth have laid a more solid foundation for consumer spending in the coming months.

The September employment report released this week will provide more clues on the extent of future reductions in borrowing costs.

"The resilience and stronger footing of consumer spending reinforces our belief that the near-term economic outlook remains bright," said Michael Pearce, deputy chief U.S. economist at Oxford Economics. "This will ultimately help drive a renewed pace of hiring and help keep the labor market solid over the next year or two. This will be a factor that helps convince the Fed to slow the pace of rate cuts next year."

Consumer spending, which accounts for more than two-thirds of U.S. economic activity, rose 0.2% in August, the Commerce Department's Bureau of Economic Analysis said, compared with economists' expectations for a 0.3% increase. The July reading was confirmed as a 0.5% increase.

After adjusting for inflation, consumer spending rose 0.1% in August after rising 0.4% in July. Economists estimate that real consumer spending is expected to have increased at an annual rate of 3.4% so far this quarter. It rose 2.8% in the second quarter.

Personal income rose 0.2% in August as personal interest and dividend income fell. However, wages rose 0.5% in August after rising 0.3% in July. The savings rate fell to a still-high 4.8%, with July’s reading revised up to 4.9% from 2.9% previously.

The personal consumption expenditures (PCE) price index rose 0.1% month-over-month in August, in line with expectations, and July’s gain was confirmed as 0.2%. The PCE price index rose 2.2% year-over-year in August, the smallest year-over-year gain since February 2021, and the gain in July was 2.5%.

Excluding the volatile food and energy components, the PCE price index rose 0.1% month-over-month in August, and the gain in July was confirmed as 0.2%. The core PCE price index rose 2.7% in August, compared with a 2.6% gain in July, the Fed’s preferred inflation target.

The CME FedWatch Tool shows that financial markets are pricing in a 50 basis point rate cut at the Fed’s Nov. 6-7 policy meeting, up from 50% previously to about 52.8%. The probability of a 25 basis point rate cut fell to about 47.5% from 50% before the data was released.

A separate report from the Commerce Department's Bureau of Economic Analysis on Friday showed the goods trade deficit shrank by $8.6 billion, or 8.3%, to $94.3 billion in August. The decline was the largest since November 2022. The narrower deficit reflected a 1.6% drop in imports, led by declines in industrial goods and motor vehicles.

Goods exports rose 2.4%, driven by consumer goods, other goods and automobiles. Wholesale inventories rose 0.2% and retailers' inventories rose 0.5%. Inventories are expected to offset some of the small drag on GDP expectations from trade.

Dollar weakens after inflation data, U.S. Treasury yields fall

The dollar fell 0.1% on Friday, hitting a 14-month low of 100.15 at one point, closing at 100.45 after previously released U.S. inflation data showed price pressures continued to weaken.

"(Fed Chairman) Powell can breathe a little easier," said Brian Jacobsen, chief economist at Annex Wealth Management in Menomonee Falls, Wisconsin. "After pushing for a 50 basis point rate cut instead of a more conventional 25 basis point cut, personal income and spending data have so far vindicated that decision."

The dollar fell about 0.2% last week, its fourth straight week of declines and ninth in the past 10 weeks. The dollar's relative weakness still provides good support for gold prices.

The 10-year benchmark Treasury yield fell 3.8 basis points to 3.751% on Friday, setting up for its biggest one-day drop in two weeks. The 10-year Treasury yield has been on a generally upward trend since the Fed cut interest rates by 50 basis points on Sept. 18.

Some analysts attributed the rise to technical factors, with Treasury yields falling sharply for several consecutive days before the Fed took action to prepare for the first rate cut in more than four years.

Analysts said that the ongoing conflict in the Middle East and Israel's attack on Lebanon also pushed up government bond prices and put pressure on yields.

However, it should be reminded that this trading day is the last trading day of September and the last trading day of the third quarter. Investors also need to be wary of the possibility of abnormal market fluctuations caused by traders' position adjustments.