At present, the main macro drivers in global financial markets are concentrated on three fronts: the further easing of inflation in major economies, shifting expectations for monetary policy paths, and marginal changes in the attractiveness of U.S. dollar assets.
A series of recently released U.S. economic indicators show some loss of momentum on the demand side, with inflation pressures continuing to trend lower. Combined with more dovish signals from several Federal Reserve officials, market expectations for further easing within the year have risen significantly.
Against this backdrop, the U.S. Dollar Index has undergone a technical pullback, while real yields on U.S. Treasuries have moved lower in tandem. As a result, the relative appeal of non-yielding assets such as precious metals has increased. Spot gold prices are oscillating near recent highs, with bulls and bears locked in a tug-of-war around key technical structures.
The latest batch of U.S. data overall points to slower growth and softer inflation. The just-released Producer Price Index showed core PPI rising 2.9% year-on-year. Although slightly higher than the previous reading, it remained within market expectations, and the month-on-month increase was marginal, reflecting continued easing in upstream price-pass-through pressure.
At the same time, retail sales were weak, rising just 0.2% in September, significantly below the 0.4% consensus. This suggests consumers have become more cautious about spending, which may be linked to a marginal loosening in the labor market and rising uncertainty about future income prospects.
Taken together, these indicators point to softer domestic demand, providing more justification for a shift in monetary policy. In this context, a number of Fed officials have recently expressed reservations about further tightening and have begun to discuss the possibility of rate cuts.
Because gold is denominated in U.S. dollars and does not generate fixed income, its holding cost declines as real interest rates fall, thereby enhancing its value in asset allocation. Thus, the current upswing in gold prices is not an isolated price move, but rather the result of asset rebalancing under a changing macro environment.
Market Analysis:
On the 4-hour chart, gold is facing resistance and consolidating, with the MACD lines and histogram expanding above the zero line. From a market-performance perspective, gold has shown a clear upward trend over the past period and has formed a typical ascending expanding pattern on the technical chart.
This pattern is characterized by gradually widening price swings, with successive higher highs and higher lows. It reflects intensifying disagreement between bulls and bears, but with the overall structure still tilted in favor of buyers.
