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Comex Gold Retreats, Price $20 Off $2000 Despite US Fed, Gaza, Jobs Data

GOLD PRICES erased a small bounce from 1-week lows in London trade Thursday, holding $20 per ounce below the $2000 mark as speculation in Comex gold futures retreated despite fierce fighting between Hamas terrorists and Israeli forces in Gaza, a further drop in bond yields, plus mixed US jobs and economic data, following yesterday's signal from the Federal Reserve that it is done raising overnight Dollar interest rates to fight inflation.
"We remain strongly committed to bringing inflation back down to our 2% goal," said Fed chair Jerome Powell, after the US central bank held its target cost of borrowing unchanged from July's US rate rise to the highest effective level since 2001 at 5.33% per annum.
"The fact is the committee is not thinking about rate cuts right now at all. We're not [yet] talking about rate cuts."
With the Bank of England pausing its UK rate-rises at its November meeting today, all 4 of the world's reserve currency central banks have left overnight rates unchanged in the past week, the first such time since April 2022.
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After Comex futures showed a near-record jump in new bullish gold bets on last week's data, Tuesday saw the sharpest decline in Comex gold 'Open Interest' – meaning the total number of gold futures contracts now open – in more than 2 weeks, down 0.9% from Monday but still nearly 1/10th larger than the eve of Hamas' 7th October atrocities.
Wednesday then saw OI edge lower again, the first such 2-day stretch of falling interest in Comex gold futures since the end of September.
Chart of Comex gold futures open interest rate vs. London bullion market benchmark price. Source: BullionVault
Separate data from the CME derivatives exchange shows that betting sank overnight that the Fed will now raise rates in either December or January, but the consensus remains that the first cut from today's 5.25 to 5.50% range won't come before June.
Global stock markets leapt following the Fed's decision and Powell's press conference, putting the MSCI World Index on track for its strongest 1-day gain of 2023 to date with a rise of 1.6%.
Longer-term US, Euro, UK and Japanese borrowing costs all fell hard in contrast on Thursday after the last week's inaction from their central banks, wrinkled only by the Bank of Japan loosening its control over 10-year Japanese government yields, allowing them to reach decade highs above 0.96% per annum before falling back towards 0.90% today.
Ten-year UK Gilt yields today fell to 4.36% per annum, down 0.4 points from August's multi-year highs, while German Bund rates dropped towards mid-September levels at 2.71% and 10-year US Treasury yields sank to 2-week lows beneath 4.68%, more than 0.3 points below the 2007 levels reached barely 2 weeks ago.
For the Dollar price, $2000 gold "is not very far from where we are at the moment," Reuters quotes senior consultant Harshal Barot at independent analysts Metals Focus.
"So, given the volatility that we've seen in the price over the past month or so, it cannot be ruled out that we won’t see those levels again."
With Comex speculation easing around the Fed decision, the UK gold price meantime dropped to 1-week lows at £1625 on Thursday, while Euro gold prices lost almost 2% from Friday's record-high weekend close to trade at €1865 per ounce.
Silver prices also dropped Thursday, losing 40 cents to trade near Tuesday's 1-week lows around $22.69.
"We are at the height of battle," said Israel's Prime Minister Benjamin Netanyahu today as Israeli forces pushed into Gaza City, repeating a phrase he used in May this year to describe a bombardment which at the time he called "the hardest blow" ever known by Hamas, the Islamic Jihad group behind 7th October's atrocities in southern Israel.
With European Central Bank interest rates now the highest ever in the 20-nation currency union's 25-year history, Germany's unemployment rate rose in October to 5.8%, new data said Thursday.
US firms planned to make fewer job cuts than analysts expected last month, the Challenger report said, while total vehicle sales slowed only slightly and factory orders from September came in higher than forecast.
But ahead of tomorrow's key US non-farm payrolls report, both initial and continuing jobless benefit claims rose on the latest weekly figures, while unit labor costs for the July-September quarter showed a surprise drop.

Adrian Ash

Adrian Ash, BullionVault Gold News

Adrian Ash is director of research at BullionVault, the world-leading physical gold, silver and platinum market for private investors online. Formerly head of editorial at London's top publisher of private-investment advice, he was City correspondent for The Daily Reckoning from 2003 to 2008, and he has now been researching and writing daily analysis of precious metals and the wider financial markets for over 20 years. A frequent guest on BBC radio and television, Adrian is regularly quoted by the Financial Times, MarketWatch and many other respected news outlets, and his views from inside the bullion market have been sought by the Economist magazine, CNBC, Bloomberg, Germany's Handelsblatt and FAZ, plus Italy's Il Sole 24 Ore.

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