【TMGM Financial Recap】4300 Mark, Regained, Trump Threatens to Destroy Iran, UN General Assembly May See a Turning Point!

On Tuesday, gold staged a rebound after a bottom, with prices dropping more than 1% intraday but regaining ground strongly late in the session and ultimately closing slightly higher. This trend reflects the core contradictions in the current market; On one hand, rising expectations of Fed rate hikes and high real interest rates suppress gold; on the other hand, ongoing conflicts in the Middle East are disturbing energy prices and safe-haven sentiment.

The market's pricing in monetary policy has become quite aggressive. According to the CME FedWatch tool, investors believe there is as much as a 90% chance the Fed will raise interest rates in December. Both St. Louis Fed Presidents and Chicago Fed Presidents have indicated that continued tightening is necessary to address inflation risks from strong demand and rising energy prices.

The Federal Reserve just completed its first rate hike since 2023 last week, and Chairman Wash made it even clearer to signal that further action may be taken in the coming months. Against this backdrop, rising real interest rates directly increase the opportunity cost of holding gold, naturally reducing gold's appeal as a non-interest-bearing asset. Meanwhile, the US dollar index rose amid volatility, reaching a two-month high intraday. The dollar's strength is usually negatively correlated with gold prices, further amplifying short-term correction pressure.

What has truly complicated gold price trends is the ongoing situation in the Middle East. Since the outbreak of U.S. and Israel's military actions against Iran at the end of February, energy prices have surged, global inflationary pressures have resurfaced, and many central banks have adopted restrictive policies. This chain has ultimately transmitted to the gold market, creating a clear suppressive effect. Tuesday's oil price performance offers another window to watch. Crude oil futures closed lower, briefly dipping to a two-week low. The driving factors are improvements on the supply side: the Saudi East-West oil pipeline resumes operations, exports at Yanbu Port are expected to resume, and vessel traffic in the Strait of Hormuz has increased. Iran has further hinted that if the US eases military pressure and lifts port blockades, the straits could reopen within seven days. These signals have given the market hope for supply recovery, and the drop in oil prices has temporarily eased some inflation concerns.

The U.S. Treasury market responded swiftly. The two-year Treasury yield retreated from its intraday high, and the 10-year yield also edged down, reflecting easing inflation expectations caused by falling oil prices. This attracted buying on dips, providing support for gold prices.

Market Insight:

Every combination of the dollar movement, oil price fluctuations, and Fed officials' speeches could trigger short-term fluctuations in gold prices. Investors need to be cautious that the market is already fully priced in the high probability of a December rate hike. If subsequent data or official signals of easing appear, gold may have room for a temporary recovery; Conversely, if the conflict escalates or inflation data worsens again, gold may test lower support.