【Evening Session】Fed's Hawkish Rate Cut May Benefit Gold

Gold:​

Gold dipped then recovered during the Asian session, showing potential short-term stabilization. Fed Chair Powell's remarks this morning provided only temporary noise, with the overall bullish thesis remaining intact. 

The tariff conflict appears near its end, as leaders from China and the U.S. held a meeting lasting over an hour in Busan, South Korea. Coupled with earlier statements from the U.S. Treasury Secretary, it is reasonable to infer that a balance has been found on tariffs, removing their market impact.

However, global security risks may be rising. During his visit to South Korea, Trump posted on social media that he had ordered the immediate restart of U.S. nuclear testing, stating the U.S. would accelerate nuclear weapons testing to maintain parity with other nuclear powers. This move, clearly targeting Russia and other nuclear states, risks triggering a new global nuclear arms race, potentially increasing global security risks.

Peng Cheng, Market Strategist at Zhisheng Research (exclusively invited by Plotio), believes gold's price action indicates rising safe-haven demand, potentially accelerating capital inflows into gold, significantly aiding its reversal from decline to ascent. The high uncertainty brought by Trump makes markets wary.

Technical Analysis: Gold formed a small bullish candle on the daily chart, creating an engulfing pattern. On the 1-hour chart, lows are not declining, suggesting potential short-term stabilization, but it faces overhead resistance. Intraday, watch support near 3,951 and resistance near 4,015.

Crude Oil:

Crude oil remained weak overnight. The decline in U.S. crude oil inventories failed to reverse the downward trend of oil prices, and market confidence remained extremely low.

U.S. API crude oil inventories for the week ending 24 October fell by 4.02 million barrels. U.S. EIA crude oil inventories for the same week dropped sharply by 6.858 million barrels, far exceeding the market expectation of 211,000 barrels. Both inventories have declined for two consecutive statistical periods, indicating a certain improvement in consumption, which may also be related to the decrease in imports. Specifically, U.S. EIA crude oil imports for the week ending 24 October fell from the previous reading of 656,000 barrels to -1.025 million barrels.

The preliminary Sino-U.S. trade deal alleviated fears of demand contraction from a prolonged economic conflict. U.S. Treasury Secretary Bessent confirmed a substantive framework to avoid 100% tariffs and suspend Chinese rare earth export restrictions. However, oil prices showed little reaction to this news; investors should focus on the actual market response.

Technical Analysis: Oil formed a small bullish daily candle but closed below resistance, indicating weakness. On the 1-hour chart, highs and lows are not rising, with clear resistance pressure. Intraday, watch resistance near $60.50.

U.S. Dollar:

The U.S. Dollar Index surged briefly during the Asian session on hawkish comments from Fed Chair Powell but subsequently retreated. The short-term move hasn't altered the medium-term bearish technical structure, increasing the likelihood of prolonged weakness.

The Federal Reserve cut interest rates by 25 basis points as expected. However, at the subsequent press conference, Fed Chair Powell struck a hawkish tone: he emphasized the existing divisions within the rate-setting committee, downplayed the view that a further rate cut in December was a foregone conclusion, which obscured the Fed's future monetary policy path and increased the difficulty of market judgment.

Fed officials officially announced a timeline for ending Quantitative Tightening (QT), agreeing to stop shrinking the $6.6 trillion balance sheet on 1st December, ending a three-and-a-half-year process. This means the Fed stops draining liquidity from markets, reducing interbank liquidity risks. The end of QT potentially paves the way for balance sheet expansion.​​

Technical Analysis: The U.S. Dollar Index formed consecutive small bearish candles on the daily chart, showing weak upward momentum and clear resistance from long-term moving averages. On the 4-hour chart, prices are in a previous congestion zone; a short-term rebound is possible. Intraday, watch resistance near 99.25.​​

Nikkei 225:

The index posted three consecutive bullish daily candles this week, rising steadily along moving averages; calling a top is premature. On the 1-hour chart, a false breakout upwards is possible, suggesting a high probability of a short-term pullback. Intraday, watch support near 51,150.

Copper: 

Copper formed a small bullish daily candle but approaches previous highs, facing pressure. On the 4-hour chart, a false breakout upwards formed, suggesting consolidation is likely. Intraday, watch support near $5.10.

30 October Market Snapshot:

1. The Fed cut rates by 25 bps to 3.75%-4.00%, the second consecutive cut, but Powell downplayed the likelihood of a December cut.

2. The Fed announced it will end Quantitative Tightening (QT) on 1st December.

3. The Bank of Japan kept its benchmark rate unchanged at 0.5% for the sixth consecutive meeting.

30 October Key Data/Events Preview:

1. 18:00(GMT+8) Eurozone GDP Growth Rate YoY (Q3 Preliminary).

2. 21:15 (GMT+8)Eurozone ECB Deposit Facility Rate (30 October).

[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.]

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