Gold, US Dollar, Oil
During the holidays, the Chinese market is closed. Excluding China, the global capital market continues to trade. Both crude oil and gold have shown a declining trend, and the decline is quite significant. The price of gold dropped rapidly from 1893 before the holiday to 1847. We had already judged three weeks ago that the price of gold had basically peaked and would enter a decline phase (see “China’s Turn Has Arrived, the US Still Needs Time”). According to our judgment, the gold price went through a period of sideways adjustment. Given the current significant drop in the gold price, the bulls might have already given up on this gamble. It is natural for gold, as a precious metal, to fall alongside global inflation. Additionally, the high operation of the US dollar index and the rise in the yields of US two-year and ten-year treasury bonds have played a crucial role in the rapid short-term decline of gold prices.
What surprised us was the sudden collapse of oil prices during the holiday period. WTI New York crude oil fell from $95 on September 27 to around $82, with the fastest drop on October 4. News came out from Saudi Arabia and Russia, confirming further production cuts. Looking at the oil prices, it indeed stabilized the continuous decline trend. Some in the market believe that the exit of profit-making bulls led to the short-term crash of oil prices. Looking at current global consumer data, the US economy is still very robust, and the Chinese economy shows signs of bottoming out and recovering. It’s tough for oil prices to drop significantly. The trend of oil prices in the next week might be determined by the development of the Israel-Palestine conflict. A bold speculation is that Saudi Arabia and Iran should have the capability to get intelligence on Hamas’ actions in advance. If Saudi Arabia and Iran did not stop such actions, it means these actions align with their national interests. Consequently, this would also be bullish for oil prices.
The US dollar index fell slightly during the holidays, but overall, it remained high. With the US dollar index peaking, the NASDAQ rose during the holiday period, forming a small platform. The oil price is still crucial. In this context, the Israel-Palestine conflict is not particularly good news for the global stock market.
The following are high-frequency data for this week:
*Translated by ChatGPT