Guangda Futures 1103 Gold Review: Oil price slump opens a rebound window, gold rises from a low position.

On November 2, COMEX gold rebounded from last week’s deep sell-off, surging sharply during the session, but did not recover the previous day's loss, closing at $3956.6/oz, up 1.48%. Domestic SHFE gold night session oscillated higher, closing at 849.06 yuan/g, a gain of 1.18%.

The most direct driving force behind the rebound came from the brief “relief” in inflation expectations caused by the plunge in oil prices. On Monday, news of progress in negotiations between Washington and Tehran drove crude oil down sharply—Brent crude fell 7.6% to $104.77/barrel, and WTI dropped 7.4% to $96.46/barrel, both marking the largest single-day declines since July. Iran's Supreme Leader reportedly authorized the president to pursue peace talks, and Trump also sent signals hoping for a diplomatic solution. The drop in oil prices has eased the urgency of energy-driven inflation, providing gold with a respite window that was missing in recent weeks.

On the other hand, data and interest rate hike expectations have capped the upside for the rebound. On the same day, the US October ISM Manufacturing PMI rose to 55.5, above September’s 54.5 and the market forecast of 54.7, staying in expansion territory for the tenth consecutive month, with the production index reaching its highest since November 2021. This set of data continues the narrative outlined by Q3 GDP growth of 3.4% and September core PCE YoY at 3.1%: the economy remains resilient and inflation is still stubborn. According to CME FedWatch, traders are still pricing about a 75% chance of a rate hike in December, just a slight decrease from 80% a week earlier.

Looking ahead, in the short term, gold is caught in a narrow tug-of-war between the rebound window provided by easing oil prices and the upward constraints of rate hike expectations. This week brings a high density of variables: on November 3, the US midterm elections, the JOLTS job openings, and Friday’s non-farm payroll report will successively test economic resilience and the interest rate path. If employment data weakens significantly and the December rate hike pricing drops further from around 75%, gold prices may have room for an upward test; if the data remains strong, Monday’s rebound is more likely to be seen by the market as an opportunity for bears to re-enter.

Source: Wind, Everbright Futures Research Institute

Written by: Shi Yueming

Professional qualification: F03097365

Trading advisory qualification: Z0017563

Editor: Zhu Henan