In October, the US interest rate was reduced for the third time in the current year. Notably, the language in the Fed statement points to a higher bar for further easing:
It is also significant that judging by the futures, the market does not expect a change in the key rate level in the near future:
Source: CME Group
This event has already pushed the UST10 yield to almost a three-month high:
So, what does all this mean for the gold market? The most immediate...
Ultimately, the gold price is a mirror image of the US real rate. It is very easy to prove it by demonstrating the mutual long-term dynamics of gold and the US real rate by smoothing over the short-term volatility:
By the way, it should be noted that this indicator incorporates two indicators: the 10-year Treasury yield and the rate of inflation in the US.
So, what do we have now?
Now we have inflation in the US which does not want to rise above 2%:
And we have expectations that the Fed will not reduce the interest rate in the coming months:
All this, of course, will have a positive impact on the US real rate and will put pressure on the gold price.
In light of the above, I believe that the price of gold is prone to a downward correction at the level of $1400.
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