With the landing of major events in the USA, international precious metals prices have fluctuated significantly. However, Wall Street expects that as US inflation rises and the global demand for physical gold by central banks remains strong, the future gold price will continue to be supported.

On November 7, COMEX gold opened slightly lower at $2670.2 per ounce. Overnight, COMEX gold futures fell by 2.97% to $2668.00 per ounce, continuing to move away from the historical high of $2801.80 on October 30.

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BMO's head of commodity research, Colin Hamilton, said in a report on Wednesday, "We believe that gold may become a source of funds for portfolio rotation in the short term, but given the accelerated de-dollarization, we still believe that emerging markets will provide support in the coming years."

Hamilton stated, "We expect that by the end of the year, investors will reignite some interest in the commodity markets as markets anticipate that some Asian countries will introduce more robust fiscal measures to counter some headwinds."

Matthew Jones, a precious metals analyst at Solomon Global, a London-based metal trader, said that a series of measures such as the expectation of tax cuts, deregulation, and infrastructure spending have led to a surge in the U.S. dollar and bond yields. Commitments to tax cuts pushed up U.S. Treasury yields as the market digested potential inflation and economic growth.

He stated, "The rising trend of the dollar and yields is putting pressure on gold. Gold prices usually fall as real interest rates rise, reflecting a reduced short-term demand for safe-haven assets. However, from a longer-term macro perspective, the future looks 'as good as gold.'"

Looking ahead, Wall Street remains bullish on the future performance of gold. Goldman Sachs analysts predict that by December 2025, the price of gold will rise by about 10% to $3,000 due to the demand for physical gold from central banks, inflow of investors into exchange-traded funds (ETFs) backed by physical gold, and speculative positions.

Goldman Sachs analysts Lina Thomas and Daan Struyven wrote: "History shows that when uncertainty rises and investors seek safe havens, gold holdings tend to increase."

There is still room for a rebound in the US dollar index and US bond yields.

On November 7, the US dollar index edged down by 0.05%, closing up 1.69% at 105.15. Non-US currencies fell across the board overnight, with the euro against the dollar down 1.84% at 1.0729, the British pound against the dollar down 1.25% at 1.2880, and offshore renminbi against the dollar down 1018 basis points at 7.2039.

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Adam Turnquist, Chief Technical Strategist at LPL Financial, stated that a rise in the US dollar could have a cascading effect on global markets.

Turnquist stated on Wednesday: "A sustained strengthening of the US dollar could put pressure on international stock markets, especially emerging markets and most commodity equities."

US bond yields rose across the board overnight, with the 2-year US bond yield up by 7.7 basis points at 4.272%, the 3-year US bond yield up by 9.5 basis points at 4.241%, the 5-year US bond yield up by 11.5 basis points at 4.278%, the 10-year US bond yield up by 15.7 basis points at 4.435%, and the 30-year US bond yield up by 16.8 basis points at 4.613%.

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Yardeni Research President Ed Yardeni warns traders not to push the 10-year US Treasury yield (debt market benchmark) above 5%, a level not seen since mid-2007.

Yardeni wrote in Monday's commentary, "We (have not yet) expect the 10-year US Treasury yield to reach 5%, but bond traders seem poised to take the 10-year bond yield to that level."

Yardeni Research's head said, "Investors often hear 'do not fight the Fed,' but perhaps the Fed should not fight bond traders. The bond market is quick to offset the impact of rate cuts again because the market believes the Fed cut rates too much, too fast, thus raising long-term inflation expectations. People worry that the next government will engage in more fiscal excess, exacerbating these expectations."

President of Sri-Kumar Global Strategies, Komal Sri-Kumar, added, "The bond market indicates that after the recent significant events in the United States, the massive US fiscal deficit will continue to exist, coupled with undisciplined monetary policy, US Treasury yields will be much higher." "The Fed may ignore this signal, with consequences that are unimaginable."

Previously, due to the generous fiscal policy adopted by the US government, combined with supply and demand factors related to the epidemic, the US inflation rate reached its highest level in over 40 years in 2022.

Markets are focused on the Fed's future rate cut pace

Federal Reserve officials are expected to cut rates by 25 basis points at this week's meeting, as inflation continues to move towards the 2% target. Investors are watching whether Fed Chair Powell will reveal information on future rate cut pace.

Federal Reserve officials began cutting interest rates at their September meeting, trying to figure out where rates should ultimately settle after a series of dramatic rate hikes over the past three years due to high inflation.

The market highly anticipates this week's interest rate decision announcement, expecting the Federal Reserve to cut rates by 25 basis points, and not release any new economic forecasts before December. J.P. Morgan's Chief U.S. Economist Michael Feroli said discussions about adjusting other policy focal points such as the pace of the Fed's balance sheet reduction may only be revealed in the meeting minutes, which will be published weeks later.

It is worth noting that the market is watching whether Fed Chairman Powell will reveal information on the future rate cut path during the press conference. Jeffrey Rosenberg, portfolio manager at Sheldon Capital Management, said he does not entirely believe the Fed will cut rates twice more before the year ends. Aside from the typical cliche of relying on data, Powell is unlikely to make any commitments or even hint at how quickly the Fed will cut rates starting now.

As long as the Fed acts as expected, it can send a reassuring message to investors: despite recent increases in U.S. Treasury yields, rates are still expected to decline in the future, although the speed of rate cuts remains somewhat unclear.

Jason Browne, President of Alexis Investment Partners, said: 'Our view on the Fed is the sooner they get themselves to a neutral level the better.' Here, he refers to the 'neutral' rate, a theoretical balanced rate at which monetary policy is neither restrictive nor accommodative. Powell has stated that the Fed hopes to gradually return policy rates to a neutral level over time.

This article is reprinted from 'Wind Stock', edited by China Fortune Capital: Jiang Yuanhua.