While markets were mixed on Friday as investors digested underwhelming earnings and economic data pointing to a higher-for-longer narrative, gold broke the $2K handle amidst rising tensions in the Middle East.
Chart: GOLD
Middle East tensions escalated on Friday after the Israeli military invaded Gaza. Gold moved to a May high of $2010 an ounce, but momentum eased as the minor operation reduced the risk of the conflict spreading to neighbouring areas. The yellow metal has support at $1988, with further upside limited to $2030/oz. WTI also rose about 2% to $85 a barrel but remained in a tight range pending a breakout.
UoM inflation expectations for 2024 surged to 3.8 in October and spiked to 4.2 in the revised data, the highest reading since May 2023. Consumers expressed frustration over inflation, with gas prices expected to reach their highest since June 2022. Sentiment improved from 63 to 63.8, but Core PCE inflation aligned with expectations. EURUSD ended the session muted, with $1.0598 and $1.0534 in focus.
Analysts expect the BOJ to increase its inflation forecast to 2%, with heightened speculation to hike its yield curve control (YCC) policy after Tuesday’s policy meeting due to a recent surge in yields. USDJPY fell 0.50% to 149.59 Friday, leaving resistance behind at 150 and next support at 149.10.
Evergrande Given Last Chance to Please Creditors
Shares of China Evergrande Group tumbled 20% Monday as a Hong Kong court adjourned a winding-up hearing to December 4, providing the most indebted developer with breathing room to work out a restructuring plan to address its debts. Nikkei came under pressure following the announcement but has since recovered those losses to 30700.
Australian retail sales rose 0.9% in September, the fastest pace in eight months versus forecasts of 0.3%. The introduction of a government rebate program contributed to the rise, indicating resilience in consumer spending and supporting the case for a rate hike. AUDUSD was seen trading past 0.6350 early Monday but didn’t get through Friday’s peak at 0.6369, leaving the 0.6320 support exposed.