Gold trading reminder: Gold prices have repeatedly hit record highs, analysts and retail investors are still bullish, beware of short-selling counterattacks?

In early Asian trading, spot gold rose slightly, reaching a high of $2,723.07 per ounce, setting a new record high. Gold prices rose above the $2,700 per ounce mark last Friday, closing at $2,722.13 per ounce, for the first time in history. Gold prices rose 2.45% last week, helped by escalating tensions in the Middle East, uncertainty in the US election and expectations of loose monetary policy.

"As the conflict intensified, especially after Hezbollah announced an escalation of the war with Israel, investors flocked to gold, a traditional safe-haven asset," said Alexander Zumpfe, a precious metals trader at Heraeus Metals Germany.

Israel and its enemies Hamas and Hezbollah promised to continue fighting in Gaza and Lebanon, dashing hopes that Israel's killing of Hamas leader Sinwar could accelerate the end of the Middle East war.

Driven by risk aversion and concerns about global market instability, rising geopolitical tensions have prompted investors to seek safe-haven assets such as gold.

Zumpfe added: "Fears surrounding the U.S. presidential election and expectations of loose monetary policy have further fueled gold's gains."

According to data from the London Stock Exchange Group (LSEG), gold prices have risen more than 30% so far this year, the largest annual gain since 1979, hitting record highs, due to expectations of further interest rate cuts by central banks and geopolitical uncertainty.

Rate cuts have enhanced the appeal of non-yielding gold. The European Central Bank cut interest rates by 25 basis points last week, and the market expects similar rate cuts in the next three meetings. The Federal Reserve cut interest rates by 50 basis points in September. According to CME's "Fed Watch": The probability of the Federal Reserve cutting by 25 basis points by November is 99.3%, the probability of cutting by 50 basis points is 0.7%, and the probability of maintaining the current interest rate unchanged is 0%.

Max Layton, global head of commodity research at Citigroup, expects gold prices to reach $3,000 an ounce in the next 6-12 months.

Layton added that silver is expected to perform strongly in the next three months, reaching $35 per ounce.

There are relatively few economic data on this trading day, and investors need to focus on the speeches of Federal Reserve officials and news related to the geopolitical situation.

It should be reminded that the survey shows that most institutions and retail investors are bullish on the future trend of gold, with analysts bullish at a high of 94% and retail investors bullish at a high of 72%. Almost no analysts are bearish on the market outlook. Generally speaking, when the market is extremely bullish or extremely bearish, the market will usher in profit-taking, which is often the time when the market turns around, and investors need to be vigilant.

From a technical perspective, the daily MACD has also issued a top divergence signal again, and KDJ has also run to the overbought area again. Investors need to beware of the possibility of a short-term correction in gold prices.

This week's overall economic data is relatively small, and investors need to focus on the performance of PMI data in Europe and the United States in October.

Israeli Prime Minister's private residence was attacked by drones, and Hezbollah fired rockets into northern Israel

Israeli Prime Minister Benjamin Netanyahu's private residence in the northern Israeli city of Caesarea was attacked by drones on the 19th, causing no casualties. On the same day, Lebanon's Hezbollah fired a large number of rockets into many places in northern Israel, killing one person and injuring at least nine people. The Israeli Prime Minister's Office confirmed on the 19th that Netanyahu's private residence in Caesarea was attacked by a drone that morning. Neither Netanyahu nor his wife were in the house at the time, and there were no casualties. Earlier, the Israel Defense Forces said that a drone launched from Lebanon attacked a building in Caesarea.

Netanyahu and the Israeli government subsequently issued a statement saying that Lebanon's Hezbollah and Iran planned the attack and said they would pay a price for it.

The Times of Israel quoted the British Prime Minister's Office on the 19th local time as saying that British Prime Minister Starmer had a phone call with Israeli Prime Minister Netanyahu that day and expressed "shock" that Netanyahu's residence was attacked by a drone earlier that day.

Israeli official: Israel's response to Iran's missile attack has been "finalized"

It was learned from Israel on the evening of the 20th local time that an Israeli official revealed that Israel's response to Iran's missile attack has been "finalized". The news also showed that the drone attack on Israeli Prime Minister Netanyahu's residence on the 19th will not affect the scale or timing of Israel's attack on Iran.

It is reported that the Israeli Security Cabinet meeting to be held later will discuss Israel's response to Iran and the progress of the agreement on the exchange of detained persons with the Gaza Strip Organization, and report on the drone attack on the Israeli Prime Minister's residence. In addition, the meeting will also synchronize the latest situation of the war in Lebanon and Gaza

Iranian Foreign Minister: Any attack by Israel on Iran touches the "red line" and will lead to a reciprocal response

Iranian Foreign Minister Abbas Araghchi said on the 19th that any attack by Israel on Iran touches the "red line" and will lead to a reciprocal response, but Iran will not rush.

He pointed out: "Any attack on Iran touches our 'red line', and we will not be unresponsive to such attacks. Any attack on Iran's nuclear facilities or other similar attacks will definitely trigger a response. Any attack by Israel on Iran will be met with a reciprocal response. We will not give up reciprocal response, we will not delay for too long, but we will not rush." ​​

U.S. single-family home construction hit a five-month high in September, but the housing market is expected to continue to drag down the economy in the third quarter

U.S. single-family home construction surged to a five-month high in September, but future construction permits increased only slightly. There is an oversupply of new homes in the current market, and potential homebuyers are still waiting for mortgage rates to fall.

Although single-family home construction increased for the second consecutive month, economists expect residential investment, including residential construction and sales, to continue to drag down economic growth in the third quarter.

Residential construction suffered a setback after mortgage rates soared in the spring. Mortgage rates initially fell after the Federal Reserve began cutting interest rates last month, but have risen in the past three weeks as solid economic data, including retail sales, forced traders to abandon expectations of another 50 basis point rate cut next month.

"Residential construction activity does not help the economy grow at its potential rate," said Carl Weinberg, chief economist at High Frequency Economics. "'Lower' interest rates are not the same as 'low' interest rates unless they have been falling for a while. For builders and homebuyers, the promise of more rate cuts in the future will encourage delays in new construction projects and home purchases."

Starts of single-family homes, which make up the bulk of residential construction, rose 2.7% to a seasonally adjusted annual rate of 1.027 million units last month, according to data released by the U.S. Census Bureau on Friday. Data for August were revised to show the pace of single-family homebuilding rebounding to a rate of 1 million units from a previously reported 992,000 units.

Single-family home construction increased 5.5% from a year ago. Starts fell 15.5% in the third quarter on an annualized basis after falling at a 20.1% pace in the second quarter.

Residential investment weighed on GDP in the second quarter. Growth in the third quarter is expected to be as high as 3.4%. The economy grew at a 3.0% rate in the second quarter.

"While new home inventories remain elevated, construction starts may be finding a floor," said Abiel Reinhart, an economist at JPMorgan Chase & Co. "If that holds, residential investment could turn to a small boost in the fourth quarter after being a drag in the third quarter."

U.S. Treasury yields fall, consolidate after sharp gains over the past month

U.S. Treasury yields fell on Friday, as the market consolidated after sharp gains over the past month, as investors expect the Federal Reserve to be less dovish as the U.S. economy remains stronger than previously expected.

Traders believe the Federal Reserve is unlikely to make another big 50 basis point rate cut after data showed job growth in September far exceeded expectations. Fed Chairman Jerome Powell also pushed back on the possibility of further big rate cuts.

The Fed is expected to steadily cut interest rates by 25 basis points at its next meeting. But traders are also watching the outcome of the Nov. 5 U.S. presidential election, geopolitical tensions in the Middle East and strength in risk asset markets.

"The market is clearly in consolidation; there aren't any obvious potential catalysts in the near term," said Ian Lyngen, head of U.S. rates strategy at BMO Capital Markets in New York.

However, it is "ready to react to external influences," Lyngen said. "These influences could come from stock market movements, credit volatility, geopolitical concerns, or even the progress of the presidential election."

The U.S. 10-year yield fell 2.1 basis points to 4.075% late Friday. The yield was 4.12% on Oct. 10, the highest since July 31, and 3.599% on Sept. 17, the lowest since June 2023.

The 10-year yield is just below its 200-day moving average at 4.17%.

Atlanta Federal Reserve President Raphael Bostic said on Friday that he would be patient with rate cuts to ensure inflation does not stagnate above the Fed's 2% target.

Traders are currently pricing in a 44 basis point rate cut by the end of the year, meaning they are less certain about the Fed cutting rates by 25 basis points at each of the next two meetings.

The dollar's rally took a breather

The dollar fell on Friday, taking a breather after five straight days of gains, as a new round of stimulus measures from Asian giants boosted risk appetite and boosted global stocks, led by Chinese stocks.

However, the dollar index rose for the third consecutive week on a weekly basis, rising 0.52% last week. So far this month, the dollar index has risen about 2.7%, setting up for its biggest monthly gain since February 2023.

The dollar index fell 0.3% to 103.47 at the end of trading on Friday, the biggest one-day drop since late September.

"The dollar's pullback was driven more by Asian giants, which introduced measures to support stock markets," said Erik Bregar, director of foreign exchange and precious metals risk management at Silver Gold Bull. "This boosted Asian giant stocks and broader risk sentiment, kicking off a pullback in the dollar." "

However, Bregar said the dollar's price action on Friday was likely temporary.

"Speculation that the Fed might follow up its 50 basis point rate cut in September with a similar move has been crushed by a slew of data suggesting resilience in the U.S. economy," wrote Jane Foley, head of FX strategy at Rabobank. "Instead, there are rumblings that the FOMC may only be looking to cut rates once more before the end of the year."

The increased likelihood of a win for former President Donald Trump in the November election has made the dollar's overall performance even brighter, as his proposed tariffs and tax policies are seen as likely to keep U.S. interest rates high.