In the early hours of October 9 (Beijing Time), the U.S. Federal Reserve released the minutes of its September monetary policy meeting. The minutes showed that although officials had some differences regarding the degree of policy restraint and the future path, nearly all members were inclined to continue cutting interest rates within the year, and most believed that further easing measures were justified.
After the release of the meeting minutes, according to the latest data from the CME FedWatch Tool, the probability of the Federal Reserve cutting interest rates by 25 basis points in October has reached 94.6%, while the probability of a cumulative 50-basis-point rate cut by December has also risen to 80.1%—which is highly consistent with the market’s previous expectations. The clear signal from the minutes indicates that the possibility of a cumulative 50-basis-point rate cut within this year is extremely high.
The market generally predicts that the Federal Reserve will continue to cut interest rates at the remaining two meetings this year and gradually lower the interest rate to a more neutral range of 2.75%-3.00% in 2026. Some Fed officials with voting rights emphasized that continuing to cut interest rates is crucial to alleviating the current pressure on the labor market and supporting the sustained economic recovery. Whether the unemployment rate rises further will also become an important basis for decision-making at the December monetary policy meeting.
Since October 1, the U.S. government has been in a shutdown, causing significant disruptions to the market. Trump warned that the shutdown could lead to layoffs and project cuts, which has heightened uncertainty about the U.S. economic outlook and stimulated the continuous inflow of safe-haven funds into the gold market. Over the past two months, the price of gold has performed strongly, fully reflecting the market’s vigilance against potential risks.
In addition, the U.S. government shutdown has prevented the timely release of a number of key economic data, including nonfarm payroll data, leaving the market temporarily without important references. Many Federal Reserve officials have expressed concerns about this, further strengthening gold’s safe-haven attribute. From a historical perspective, the direct impact of U.S. government shutdowns on gold is usually limited, which is why previous shutdowns have been relatively short-lived. However, the duration of this shutdown may be extended, which could cause substantial damage to the economy. Coupled with the significant weakening of U.S. dollar credit and the deepening trend of global de-dollarization, gold’s performance against this backdrop has far exceeded market expectations.
Mai Dong, an Investment Strategist at Zhisheng Research(exclusively invited by Plotio), believes that the core logic behind gold’s recent strength lies in the market’s concerns about the U.S. economy triggered by the government shutdown and the strong market expectation that the Federal Reserve will continue to cut interest rates within the year. Although there have been signs of peace in the Middle East recently, which may lead to a phased cooling of risk aversion and a risk of gold prices pulling back to $3,900, the upward trend is difficult to reverse in the medium term. Comprehensive judgment shows that even if the situation in the Middle East eases and the U.S. government ends the shutdown, gold is still expected to continue its long-term bull trend, supported by core factors such as the continuous advancement of the "de-dollarization" process and the stagnation of major European and American economies.
From a technical perspective, gold is in a strong upward trend on the weekly chart, with prices breaking through the $3,900 and $4,000 levels in succession. In the medium term, if the market pulls back to the range of $3,860-$3,900, it will still be an opportunity to establish long positions, and there is potential for gold prices to hit a new all-time high again in the future.
[Important Disclaimer:The above content and views are provided by Zhisheng, a third-party cooperative platform, for reference only and do not constitute any investment advice. Investors who trade based on this information shall bear their own risks.]
In the event of any inconsistency between the English and Chinese versions, the Chinese version will prevail.This article is from Plotio. Please indicate the source when reprinting.
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