Gold trading reminder: Two major negative factors suppressed gold prices, hitting a new low in more than two weeks, pay attention to the minutes of the Federal Reserve meeting

Spot gold fluctuated in a narrow range in early Asian trading on Wednesday (October 9), currently trading at $2,622.88 per ounce. Gold prices fell more than 1% during trading on Tuesday, hitting a low of $2,604.68 per ounce, the lowest since September 20, and closed at $2,621.76 per ounce. Recent U.S. employment data hit expectations of a larger rate cut, while Hezbollah's efforts to support a ceasefire and market concerns about a possible all-out war in the Middle East have cooled, also weakening gold's safe-haven buying.

However, the market is waiting for the minutes of the Fed's most recent policy meeting to find new signals. Although technical indicators show that gold prices are still at risk of further correction in the short term, the prospect of rate cuts by most central banks around the world still attracts bargain-hunting buying to support gold prices.

David Meger, director of metals trading at High Ridge Futures, said: "There has been a correction or retreat in the past few days due to changes in the outlook for interest rates." He also said that expectations of further large rate cuts have been hit by the recent surge in Treasury yields.

U.S. Treasury yields were mixed on Tuesday, with short-term yields falling and long-term yields rising, as factors such as the Federal Reserve's monetary policy, investors' positioning and economic prospects affect market trends.

Investors continue to adjust their expectations for further Fed rate cuts and await the release of the Fed's September meeting minutes to get a clearer picture of what prompted the Fed to cut rates sharply as the economy remains resilient. The minutes are scheduled to be released on Wednesday.

U.S. interest rate futures market pricing shows that the Fed has an 88% chance of a 25 basis point rate cut at next month's meeting and a 12% chance of a pause. Before the September jobs report released last Friday changed the market's thinking, the interest rate futures market pricing showed that the Fed had a 50% chance of a sharp 50 basis point rate cut and a 50% chance of a 25 basis point rate cut.

Investors also said that for most of this year, the market expected many rate cuts in the next two years, and the recent market's reduction in expectations for rate cuts was considered long overdue.

"Recent economic data, especially last Friday's jobs report, have not justified the summer rally in Treasuries," said Kevin Flanagan, head of fixed income strategy at WisdomTree in New York.

The 10-year Treasury yield edged higher on Tuesday to 4.028%, rising for the fifth straight session and hitting a 10-week high of 4.057%.

The 30-year Treasury yield also hit a new high since late July at 4.342% on Tuesday and was last up 1.5 basis points at 4.319%.

Data released on Tuesday showed that the U.S. trade deficit narrowed 10.8% to $70.4 billion in August, the smallest in five months, suggesting that trade had a largely neutral impact on economic growth in the third quarter. Exports rose 2.0% to a record $271.8 billion. The smaller-than-expected trade deficit, along with labor market and consumer spending data, suggests that the U.S. economy remained solid in the third quarter. This reinforces the view that the Fed does not need to cut interest rates by another 50 basis points.

Atlanta Fed President Bostic said last week's employment data confirmed that the U.S. labor market may be slowing but remains strong, with an unemployment rate of 4.1% close to full employment and employers adding jobs faster than needed to keep up with population growth. He said monthly job growth was "quite strong."

Bostic said if monthly job growth falls below 100,000, he would doubt whether the Fed should consider cutting interest rates faster than originally planned.

However, Boston Fed President Collins said that with weaker inflation trends, the Fed is likely to have more rate cuts. Looking ahead, "maintaining the current healthy labor market conditions will be very important."

Collins believes that there is still some way to go to push inflation back to the Fed's target. She said inflation is likely to remain near current levels in the coming months, and price pressures will slow to 2% by around the end of 2025. [nL6S3LK0O2]

The dollar held firm on Tuesday, hovering below a seven-week high hit last week, as investors assessed the prospect of further U.S. rate cuts, and concerns about the Middle East conflict and the economic difficulties of Asian powers also provided support for the dollar. The dollar index closed at 102.45 on Tuesday, close to flat. In the Asian market on Wednesday, the dollar index fluctuated narrowly around 102.45, not far from the nearly one-month high of 102.69 set last week, which still put some pressure on gold prices.

In terms of geopolitical situation, the Israeli Prime Minister said that two successors of Hezbollah leader Nasrallah had been killed. Hezbollah publicly supported a ceasefire in Lebanon for the first time, and it was not conditional on stopping the conflict in Gaza. Market concerns about the geopolitical situation have cooled down.

Israeli Prime Minister Netanyahu said on Tuesday that Israeli air strikes had killed two successors of Hezbollah leader Nasrallah, while Israel expanded its ground offensive against the organization and deployed a fourth army division to southern Lebanon. Netanyahu did not reveal the names of the two "successors". Israeli Defense Minister Galant said Saffieddin, who is expected to succeed Nasrallah, may have been "eliminated."

In addition, Hezbollah's No. 2 figure, Naim Qassem, said in a televised speech at a secret location that he supported efforts to reach a ceasefire. Netanyahu's office declined to comment on Qassem's remarks. US State Department spokesman Miller said Hezbollah "changed its attitude and hopes for a ceasefire" because the organization is "at a disadvantage and has suffered heavy losses" on the battlefield.

It is worth mentioning that a delegation from the Palestinian Islamic Resistance Movement (Hamas) has arrived in Cairo and will hold talks with representatives of the Palestinian National Liberation Movement (Fatah) on reconciliation and Gaza. Hamas and Fatah representatives will hold talks on reconciliation and Gaza The source said that the Hamas delegation was led by senior official Khalil Haya, and the talks would be held under the auspices of Egypt to promote reconciliation between the two major Palestinian factions, Hamas and Fatah. The main topics of the talks include the current situation in the Gaza Strip and the future of the Rafah crossing between the Gaza Strip and Egypt. Israel currently controls the Gaza side of the Rafah crossing.

Market focus is on the minutes of the latest policy meeting of the Federal Reserve, which will be released on Wednesday, followed by U.S. consumer price index (CPI) data on Thursday and producer price index (PPI) data on Friday.

Global physical gold-backed exchange-traded funds (ETFs) attracted inflows for the fifth consecutive month in September as funds listed in North America increased their gold holdings, the World Gold Council (WGC) said on Tuesday. This is still expected to provide support for gold prices in the medium and long term.