【Evening Session】Pattern Restored, Gold Likely to Stage a Rally

Gold:

Overnight, gold fluctuated slightly with a marked slowdown in downward momentum. Technically, its pattern has been restored, leaving open the possibility of a short-term rally.

The previous decline of gold might have been just a "fake drop". Backed by strong buying interest, gold is likely to resume its earlier strong upward trend. In September, the monthly net inflow of global physical gold ETFs hit a record high, with the total capital inflow in the third quarter reaching a record $26 billion. In the first three quarters of this year, global central banks net purchased 890 tons of gold. Although slightly lower than the same period in 2024, this still ranks as the second-highest level in history.

Peng Cheng, Market Strategist at Zhisheng Research(exclusively invited by Plotio), believes that the gold-purchasing activities of central banks worldwide provide strong support for gold. After the U.S. launched the tariff war, countries have significantly accelerated the diversification of reserve assets. Gold, as a reserve asset, is becoming increasingly attractive. It has overtaken U.S. Treasuries, the traditional risk-free asset. Looking ahead, driven by continued purchases by central banks, gold still has great upside potential.

Technical Analysis：Gold closed with a medium bullish candle on the daily chart, engulfing the previous bearish candle, indicating potential for further rally. On the 1-hour chart, a downward continuation pattern has formed, suggesting a possible short-term new low. However, a strong rebound may follow once a new low is reached. Intraday focus should be on the support level around $4,000.

Crude Oil:

Overnight, oil prices continued to rebound, hitting a new high since the start of this month. Sources suggest that the earlier measures taken by the U.S. against Russia and other oil-producing countries might have aimed to suppress oil prices, creating room for the U.S. to escalate its actions.

Insiders revealed that U.S. President Trump may further tighten sanctions on Russia's oil industry. With an expected global crude oil surplus next year, the U.S. has sufficient room to escalate sanctions without disrupting domestic oil prices.

Weaker oil prices can not only crack down on U.S. rival countries but also help boost Trump's approval rating domestically. Previously, the U.S. has forced countries like Japan to sign contracts to purchase U.S. energy, allowing U.S. energy companies to lock in future profits. Thus, the impact of oil price suppression on U.S. energy companies may be limited.

Technical Analysis：Crude oil closed with a large bullish candle on the daily chart, but faces resistance from previous highs and a former high-volume trading zone, resulting in significant upward pressure. On the 4-hour chart, prices show signs of overbought conditions, with upward momentum slowing down. A pullback is possible intraday, so focus on the support level around $59.90.

U.S. Dollar Index:

Recently, the U.S. dollar has shown obvious weakness and lack of upward momentum. With the Federal Reserve's interest rate decision meeting approaching next week, further rate cuts are a foregone conclusion, which will push the U.S. Dollar Index to continue weakening.

As of October 24, according to CME's "FedWatch Tool", the probability of a 25-basis-point rate cut by the Federal Reserve in October is 98.3%, while the probability of keeping rates unchanged is 1.7%. The probability of a cumulative 50-basis-point rate cut by December stands at 93.4%. Successive rate cuts have been basically confirmed by the market, and investors have increased their bets on consecutive rate cuts.

More importantly, the Federal Reserve may halt its balance sheet reduction while cutting interest rates. As of the week ending October 22, bank reserve balances decreased by approximately $59 billion to $2.93 trillion, falling below the $3 trillion mark for the second consecutive week and approaching the $2.7 trillion safety threshold. To avoid liquidity risks in the banking system, the Federal Reserve must stop withdrawing liquidity from the market. Strategists at JPMorgan Chase and Bank of America latest predict that the Federal Reserve will announce the end of the reduction of its approximately $6.6 trillion balance sheet at next week's interest rate meeting.

Technical Analysis：The U.S. Dollar Index closed with consecutive small bullish candles on the daily chart, but upward momentum is very weak, with obvious resistance from long-term moving averages above. On the 4-hour chart, prices have entered a former high-volume trading zone, and short-term movement may be dominated by a rebound. Intraday focus should be on the support level around 98.75.

Nikkei 225:

The Nikkei 225 closed with a small bullish candle on the daily chart, with short-term moving average support remaining effective, suggesting that the correction may end ahead of schedule. On the 4-hour chart, the previous high provides significant support, and prices have broken through a key resistance level, indicating a high probability of continued short-term upward movement. Intraday focus on the support level around 48,670.

Copper:

Copper closed with a large bullish candle on the daily chart, approaching previous highs and forming an upward continuation pattern. On the 4-hour chart, prices have stood above the long-term moving average and a reversal pattern has formed, indicating that short-term movement is likely to be dominated by fluctuating upward trends. Intraday focus on the support level around $5.

24 October Market Snapshot：

1.US. President Trump stated in a post that, in view of Canada's serious misconduct, he announced the termination of all trade negotiations with Canada.

2.The former Commissioner of the U.S. Bureau of Labor Statistics warned that due to data gaps, the risk of the Federal Reserve making decisions blindly has increased significantly.

3.Japan's core CPI rose to 2.9% year-on-year in September, increasing pressure for interest rate hikes. However, there remains significant market divergence regarding the timing of the rate hike..

24 October Key Data/Events Preview：

1.20:30 (GMT+8): U.S. September Unadjusted CPI Year-on-Year will be released, with a market expectation of 3.1%. 

2.21:45 (GMT+8): U.S. October S&P Global Manufacturing PMI Flash will be released, with a market expectation of 52.

3.22:00 (GMT+8): U.S. October University of Michigan Consumer Sentiment Index Final will be released, with a market expectation of 55.

[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.