Inventories exceed expectations to support oil prices, Powell pours cold water on expectations of December interest rate cut, gold prices narrow gains

Basic news

On Thursday (October 30, Beijing time), spot gold was trading around US$3,950 per ounce. The price of gold narrowed its gains sharply on Wednesday. Although the Federal Reserve announced a 25 basis point interest rate cut as expected by the market, the price of gold continued to rise. Initial optimism was quickly diluted by Chairman Powell's cautious remarks; U.S. crude oil traded around $60.18 per barrel. Oil prices rose on Wednesday after data showed U.S. crude and fuel inventories fell more than expected last week and U.S. President Trump was optimistic about trade talks, which would help ease economic tensions.

Stock Market

The U.S. stock market showed a differentiated pattern on Wednesday. The Dow unexpectedly closed down after the Federal Reserve cut interest rates, the S&P 500 almost closed flat, and Nasdaq hit a new high driven by the artificial intelligence craze.

The Dow Jones Industrial Average fell 0.16% to 47632.00 points; the S&P 500 Index fell 0.30 points to 6890.59 points; the Nasdaq Index rose 0.55% to 23958.47 points.

The Federal Reserve cut interest rates by 25 basis points as scheduled, lowering the interest rate range to 3.75%-4.00%, which should have boosted market sentiment. However, Powell's subsequent statement poured cold water on the market's optimistic expectations - he made it clear that another interest rate cut in December is "far from a certainty." The hawkish remarks immediately triggered market repricing, with traders' bets on a rate cut in December plummeting from 85% to 62%.

In this game between policy and market, NVIDIA has become the most dazzling star. The AI ​​chip maker's stock price closed up 3%, with its market value reaching a historic breakthroughThe US$5 trillion mark, with a cumulative increase of more than 50% this year. Its strong performance not only drove the Nasdaq index to rise against the trend, but also demonstrated that the artificial intelligence theme continues to lead the market trend.

Corporate financial reports are in dire straits. Industrial giant Caterpillar's share price soared 11.6% due to earnings exceeding expectations, while the results of technology giants announced after the market were clearly divided: Alphabet rose 5% due to strong demand for AI, while Microsoft fell 1% due to concerns about record AI infrastructure spending. The worst was Meta, whose stock price fell more than 8% after the market due to a one-time charge of US$16 billion and a forecast of a surge in capital expenditures next year.

Although the Federal Reserve's cautious attitude has brought short-term fluctuations to the market, the fundamentals remain solid. Data shows that about 84.2% of corporate profits exceeded expectations this financial reporting season, which is higher than the historical average. As market experts say, the decision to cut interest rates is important, but it is still the hard indicator of corporate profitability that ultimately drives the long-term performance of the stock market. The market is currently in the process of delicate rebalancing between policy expectations and corporate fundamentals.

Gold Market

Gold prices sharply pared gains on Wednesday. Although the Federal Reserve announced a 25 basis point interest rate cut as expected by the market, lowering interest rates to a range of 3.75%-4.00%, the initial optimism in gold prices was quickly diluted by Chairman Powell's cautious remarks.

Spot gold finally closed at US$3,964.39 per ounce, up only 0.3% on the day, far lower than the high of 2% surge at the beginning of the session. U.S. gold futures for December delivery closed 0.4% higher at $4,000.7 an ounce. The turning point of this trend was that Powell made it clear at the press conference that "further interest rate cuts at the December meeting are by no means a certainty" and emphasized that the policy is not on a preset track, revealing that there are significant differences within the Fed on the future path.

The market responded quickly. Analyst Peter Grant pointed out that gold has made a logical response to Powell's attempt to walk back expectations for a December rate cut. The U.S. dollar found support as bets on a year-end rate cut sharply pared back in the federal funds rate futures market, putting pressure on U.S. dollar-denominated gold. This pullback has caused gold to fall more than 3% so far this week, partly due to signs of easing in global trade tensions, although gold prices are still up 51% this year and hit a record high not long ago.

In other precious metal markets, spot silver performed well, rising 1.7%; platinum and palladium also recorded increases of 0.6% and 1.9% respectively.

Oil Market

Oil prices rose on Wednesday after data showed U.S. crude and fuel inventories fell more than expected last week and U.S. President Trump expressed optimism about trade talks, which could help ease economic tensions.

Brent crude oil futures rose 0.8% to close at $64.92 a barrel; U.S. crude oil futures rose 0.6% to close at $60.48.

Data released by the U.S. Energy Information Administration (EIA) on Wednesday showed that U.S. crude oil, gasoline and distillate inventories fell more than analysts expected last week. Data showed that crude oil inventories fell by nearly 7 million barrels, far exceeding the forecast decline of 211,000 barrels.

PriceFuturesGroup analyst Phil Flynn said after the report was released, "Where is the excess? The longer the supply glut does not appear, the more we will doubt whether it exists."

Optimism about trade negotiations and the agreement with South Korea have helped ease concerns about a decline in economic activity caused by Trump's tariffs and trade wars, which in recent months have raised concerns about oil demand and dragged down www.xm-forex.commodity prices.

However, the global economic outlook is still plagued by other problems. The divided Federal Reserve cut interest rates by 25 basis points on Wednesday as expected, but Chairman Powell sounded cautious about the future in www.xm-forex.comments after the meeting.

Four sources familiar with the talks said that OPEC+, the world's largest oil-producing group, is leaning towards a slight increase in production in December, with two of the sources saying it would increase production by 137,000 barrels per day.

Foreign Market

The U.S. dollar rose across the board on Wednesday, mainly due to the success of Federal Reserve Chairman Powell in reversing the market's strong expectations for another interest rate cut in December. Although the Fed announced an interest rate cut as expected by the market, there were significant differences within the decision-making: Governor Millan advocated for a greater reduction in borrowing costs, while Kansas City Fed President Schmid insisted that interest rates should not be cut while inflation continues. This hawkish dissent highlights policy differences within the Fed and provides evidence for Powell to signal caution.

Powell made it clear that it is difficult for Fed officials to reach a consensus on the future path, and the market should not assume that interest rates will be cut again by the end of the year. This statement had an immediate impact, with the market’s expected probability of an interest rate cut in December plummeting to 62% from about 85% in the morning. At the same time, the Federal Reserve announced that it would restart limited purchases of government bonds to ease the pressure of tighter liquidity in money markets.

In this context, the U.S. dollar index rose significantly by 0.63% to 99.28. Major currencies generally weakened against the US dollar: the euro fell 0.56% to US$1.1585; the Japanese yen fell 0.56% against the US dollar to US$152.86, although it had strengthened earlier as US Treasury Secretary Bessent urged the Japanese government to give the central bank room to raise interest rates.

The pound became one of the weakest performing currencies on the day, falling 0.9% against the dollar to $1.3151, hitting a five-and-a-half-month low. Market expectations for the Bank of England to cut interest rates next week continue to rise as recent data showed signs of easing in the British labor market and unexpectedly stable inflation, creating conditions for the central bank to ease policy. Goldman Sachs has adjusted its forecast accordingly, expecting the Bank of England to cut interest rates next month.

The Canadian dollar was relatively stable on the day, having previously hit a one-month high. bank of canadaIt cut interest rates as scheduled, but also signaled that unless the economic outlook changes, this may be the end of this cycle of interest rate cuts.

International News

Summary of the key points of Powell's October press conference

1. Policy interest rate prospects: It is not a certainty that the Fed will cut interest rates again in December. Opinions are very divided today. Some members of the FOMC believe it's time to pause. 2. Balance sheet: The www.xm-forex.composition of the balance sheet has not been decided today. The www.xm-forex.combination of the balance sheet is a long-term process and will be gradual. The desire is to adjust towards a shorter (holding) duration balance sheet. 3. Job market: Due to restrictive policies, the job market is still cooling. No signs of worsening weakness in the job market have been found, and job vacancies do suggest the market has remained stable over the past four weeks. The labor supply dropped dramatically, affecting the job market. The Fed often monitors layoff decisions closely. 4. Inflation: CPI in September was more moderate than expected. Services inflation excluding the housing market has been showing a unilateral trend. Core PCE excluding tariffs could be at 2.3% or 2.4%. So far, non-tariff inflation has not strayed far from the 2% inflation target. The base case is that there will be some additional tariff inflation in the United States. 5. Government shutdown: Data disclosed by the private industry cannot replace the statistical results of government departments (Bureau of Labor Statistics, BLS, etc.). It is conceivable that the Trump government shutdown will affect the December FOMC monetary policy meeting.

The probability that the Federal Reserve will cut interest rates by 25 basis points in December is 67.8%

According to CME's "Fed Watch": the probability that the Federal Reserve will cut interest rates by 25 basis points in December is 67.8%, and the probability of keeping interest rates unchanged is 32.2%.

Key points of the Fed's interest rate statement: Cut interest rates by 25 basis points and end quantitative tightening, two people disagreed

The key points of the Federal Reserve's interest rate resolution on Wednesday are as follows: The Federal Open Market www.xm-forex.committee (FOMC) voted 10 to 2 to adopt an interest rate cut resolution, lowering the benchmark interest rate by 25 basis points to 3.75%-4%. The Federal Reserve announced that it will stop shrinking its balance sheet starting on December 1, and at that time, maturing agency debt will be reinvested in Treasury bills. Federal Reserve Governor Stephen Millan opposed the resolution and advocated cutting interest rates by 50 basis points. Kansas City Fed President Jeff Schmid advocated keeping interest rates unchanged. The statement continued to use its previous description of the labor market, saying that "employment growth has slowed and the unemployment rate has increased, but it remained low as of August." "Recent indicators are consistent with the changes noted above" and "downside risks to employment have increased in recent months," the statement added. The Fed said existing indicators point to economic activity expanding at a moderate pace and reiterated that inflation has risen since the beginning of the year and remains relatively high.

Affected by the government "shutdown", the salary of U.S. House of Representatives staff will be suspended

On October 29, local time, staff of the U.S. House of Representatives received a notice that they will not be able to receive their scheduled 1Salary paid on October 31st. The notice stated: "Due to the interruption of appropriations, the Office of the Administrator does not have the authority to issue salaries until Congress passes a temporary appropriation resolution or the fiscal year 2026 appropriation bill and signs it into effect." Unlike Senate employees who receive salaries twice a month, House of Representatives staff are paid once a month, so the impact is more direct.

US media: The government shutdown may turn around early next week

According to Politico, the U.S. government has been shut down for nearly a month, and the situation seems to have finally begun to change. The looming critical deadline, coupled with external pressure, is adding new urgency to cross-party conversations that have been stalled for weeks. Senate Majority Leader John Thune and his Senate allies, House Speaker Mike Johnson and other House Republican leaders appear increasingly convinced that a growing number of centrist Democrats are ready to www.xm-forex.compromise on a temporary appropriations bill to lessen the impact of the shutdown, possibly as early as next week. Republican leaders are discussing a new stopgap funding bill, with dozens of options already in the works, including providing temporary funding for the government until around January 21 or later into March.

The EU-Ukraine Trade Upgrade Agreement officially www.xm-forex.comes into effect

On October 29, local time, the European www.xm-forex.commission issued a statement stating that starting from the 29th, the upgraded EU-Ukraine Deep www.xm-forex.comprehensive Free Trade Area Agreement (DCFTA) will officially enter into force. The upgraded agreement limits EU imports of sensitive agricultural products, incorporates strong new safeguards and provides for the harmonization of Ukrainian and EU production standards. The European Council issued an announcement on October 13 that the Council voted on the same day to adopt a resolution: agreeing to reduce or eliminate tariffs on Ukrainian dairy products, fresh fruits and vegetables, meat and other agricultural products in the EU-Ukraine Joint www.xm-forex.committee. The resolution stems from the preliminary agreement reached by the two sides on June 30, 2025, on the review of the EU-Ukraine In-depth and www.xm-forex.comprehensive Free Trade Area, aiming to build a long-term reciprocal trade framework.

Russian people hoard gold on a scale www.xm-forex.comparable to Spain’s national reserves

In the past four years, gold has become one of the most popular ways to save in Russia, and the total amount of gold purchased by the country’s consumers is set to reach the level of the national reserves of Spain or Austria, according to a study. AlBanyan Tree Research, a quantitative research start-up, predicts that retail purchases of gold bars, coins and gold jewelry in Russia will reach 62.2 tons (nearly 2 million troy ounces) this year.

South Korea and the United States reach a trade agreement, and South Korea will invest US$350 billion in the United States

According to foreign media reports, after several months of negotiations, the United States and South Korea finally reached a trade agreement. South Korea will invest US$150 billion in shipbuilding in the United States, and its US$350 billion investment in the US includes US$200 billion in installment cash investments. Investment is capped at $20 billion per year. In addition, the South Korean presidential adviser said that the United States will continue to maintain a 15% www.xm-forex.comprehensive tariff on South Korea and the automobile tariff will be reduced to 15%, and South Korea will receive most-favored-nation status in terms of pharmaceutical tariffs.

Domestic News

China Securities Regulatory www.xm-forex.commission: Explore the launch of a special pilot project for "AI + capital market" financial technology innovation

Li Chao, vice chairman of the China Securities Regulatory www.xm-forex.commission, said at the Capital Market Fintech Forum of the 2025 Financial Street Forum Annual Meeting Fintech Conference on October 29 that he would explore a special pilot project for "artificial intelligence + capital market" financial technology innovation to strengthen risk control and fault tolerance. While www.xm-forex.complying with national and industry requirements and with controllable risks, we will continue to deepen the research and application of artificial intelligence in key business scenarios. "A new round of scientific and technological revolution is accelerating. Artificial intelligence, as a strategic emerging technology, is profoundly changing the ecology and operating model of the capital market." Li Chao said that it is necessary to standardize the application of artificial intelligence technology and avoid possible risks. It is necessary to strengthen data security and business risk prevention and control, conduct business in www.xm-forex.compliance with regulations, and effectively protect the legitimate rights and interests of investors.

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