Everbright Futures: Gold fluctuates on the eve of CPI, market holds its breath in anticipation

On October 14, London spot gold edged lower overnight, while COMEX gold futures fell 0.15%. On the macroeconomic front, New York Fed President Williams, the Fed's third-ranking official, said there may be one more rate hike this year, but further hikes in 2027 are unnecessary; Fed Governor Waller said rising long-term U.S. Treasury yields are curbing demand in rate-sensitive sectors such as housing and autos, thereby playing a role in tightening monetary policy to some extent. Tonight's U.S. CPI data will shape expectations for future rate hikes. The market currently sees a low probability of a Fed rate hike at the October 28 meeting, but a rise in core CPI month-on-month to 0.3% could reignite rate-hike concerns. Ahead of the major data release, funds are cautious, and gold is expected to remain range-bound at low levels in the near term. The IMF's latest World Economic Outlook shows that net borrowing by advanced economies this year will reach 5.2% of GDP, the highest since 2021; U.S. general government net borrowing will reach 8.5% of GDP, up from 7.1% in 2025 and worse than the April assessment. On the geopolitical front, Trump said on the 13th that he had spoken with the Saudi crown prince but declined to say whether he had decided to join operations against the Houthis, and accused the Houthis of deliberately driving up oil prices ahead of the U.S. midterm elections. Gold prices are still fluctuating repeatedly at low levels, which may be related to U.S. long-term Treasury yields remaining at elevated levels. For the market, there are two contradictions: on one hand, concerns about the risk of U.S. long-term Treasury yields spiraling out of control; on the other hand, it also boosts the appeal of dollar assets. Overall, expectations of weakening U.S. economic data have limited the short-term downside for precious metals, but elevated long-end rates or rate-hike expectations, together with a strong dollar, still pose valuation constraints, and a cautious view remains warranted.