After hitting a new high, gold prices plummeted by nearly $50 at one point

On Wednesday (October 23rd), the US Dollar Index continued its upward trend, with the US Dollar/Japanese Yen once breaking through 153, setting a new high in nearly three months. The spot gold price turned down after hitting a historical high, with the gold price falling nearly $50 from its peak.

Closing prices on October 23rd:

Forex: EUR/USD closed at 1.07806; GBP/USD closed at 1.29156; USD/JPY closed at 152.67; AUD/USD closed at 0.66276; USD/CAD closed at 1.38353; USD/CHF closed at 0.86539.

Commodities: Spot gold closed at $2,715.24 per ounce; spot silver closed at $33.677 per ounce; NYMEX crude oil closed at $70.77 per barrel; Brent crude oil closed at $74.96 per barrel.

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Key news review:

1. On Wednesday (October 23rd), the spot gold price turned down by more than 1% after reaching a historical high. Analysts pointed out that the strengthening of the US Dollar and US Treasury yields, coupled with a reduction in Middle Eastern tensions, were the main reasons for the significant drop in gold prices on Wednesday. In addition, the recent rapid rise in gold prices led to overbought technical indicators, prompting some investors to take profits.

What exactly happened? Gold prices plummeted by more than $33 as a ceasefire was suddenly announced in the Middle East. How to trade gold?

2. The Japanese Yen's exchange rate against the US Dollar fell to its lowest level in nearly three months, once again raising concerns that if the Yen continues to depreciate, Japanese officials may take measures to support the Yen. Yukio Ishizuki, a senior foreign exchange strategist at Daiwa Securities in Tokyo, said: "Given the current momentum, the Yen may further weaken, and the US Dollar may further strengthen. If the Yen continues to weaken, authorities may intervene to curb it."

Beware of a sudden "black swan" event in Japan! Breakout big trend: Yen plummets by 166 points, what exactly happened?

3. On Wednesday, the Bank of Canada lowered interest rates by 50 basis points, reducing the benchmark rate from 4.25% to 3.75%, in line with market expectations, marking the fourth consecutive rate cut. Economists widely anticipated this significant rate cut, as inflation slowed down more than expected and returned to the central bank's 2% target.King move! The Bank of Canada cuts interest rates by 50 basis points.

4. Due to traders reassessing the Federal Reserve's interest rate cut path, the bond market is in a selling mode. After the Federal Reserve's substantial rate cut of 50 basis points last month, traders have digested the expectations of a significant rate cut and adjusted their forecasts accordingly.

5. On Wednesday, one of the world's largest asset management companies, Pacific Investment Management Company (Pimco), warned that investors' excessive focus on high-risk bonds in emerging markets is a dangerous signal. Against the backdrop of a tightening global financing environment and escalating geopolitical conflicts, many investors are attracted by the returns of high-yield bonds in emerging markets. However, Pimco believes this strategy poses significant risks.

The world's largest asset management company warns: Chasing high-yield bonds in emerging markets is like "licking honey off a knife."

6. According to Reuters, McDonald's stock fell by 7.3% in the morning on Wednesday due to an E. coli outbreak linked to the fast-food chain's popular menu item, the "quarter-pound burger," which resulted in one death and 49 illnesses in the United States. The day before, the U.S. Centers for Disease Control and Prevention stated that the outbreak had spread to 10 states, with at least 10 people hospitalized. The earliest reported cases appeared at the end of September and continued into October.

McDonald's stock falls due to an E. coli outbreak in the U.S., causing 1 death and 49 illnesses.

Foreign Exchange Market

On Wednesday, the U.S. dollar index continued its upward trend due to strong U.S. economic performance and diverging expectations for interest rate cuts by major global central banks. The dollar/yen exchange rate once broke through 153, reaching a new high in nearly three months.

The U.S. dollar index (DXY), which tracks the dollar against six major currencies, rose by 0.32%, reporting at 104.43. It reached a peak of 104.57 during the session, the highest point since July 30.The US dollar is on track for a fourth consecutive weekly gain. A series of recent positive economic data have weakened market expectations for the scale and speed of Federal Reserve rate cuts, which has also driven US Treasury yields higher.

The US 10-year Treasury yield rose by 3.4 basis points on Wednesday to 4.24%, after touching a three-month high of 4.26%.

The US dollar/Japanese yen closed up 166 pips on Wednesday, a 1.1% increase, at 152.67. It reached as high as 153.18 during the session, the highest point since July 31, when the Bank of Japan raised rates to their highest level since 2007.

Recent polls indicate that the ruling Liberal Democratic Party may lose its majority with its coalition partner Komeito. The risk of a minority coalition government increases the possibility of political instability, which could complicate the Bank of Japan's efforts to reduce its reliance on monetary stimulus.

The euro/dollar closed down 0.16% on Wednesday, at 1.0781, after falling to 1.0760, the lowest since July 3.

European Central Bank President Christine Lagarde stated on Wednesday that the bank needs to be cautious when deciding on further rate cuts and should base decisions on upcoming data.

The US dollar/Canadian dollar rose by 0.16% on Wednesday, closing at 1.3835. The Bank of Canada cut rates by 50 basis points to 3.75% on Wednesday, as expected by the market. This is the first time in over four years that the bank has taken a rate cut larger than the standard amount, signaling that Canada has returned to an era of low inflation.

Stock Market

On Wednesday, US stocks fell sharply, with market sentiment weighed down by rising US Treasury yields. The Dow Jones Industrial Average plummeted nearly 400 points, marking the largest single-day drop in over a month. Meanwhile, a series of important company earnings reports are set to be released.

The Dow fell 409.94 points, a 0.96% decrease, to close at 42,514.95; the Nasdaq fell 296.47 points, a 1.60% decrease, to close at 18,276.65; the S&P 500 fell 53.78 points, a 0.92% decrease, to close at 5,797.41.On Wednesday, European stock markets fluctuated downwards and closed lower, with mining stocks being a significant factor dragging down the market. Additionally, weak earnings from heavyweight companies such as Germany's largest bank, Deutsche Bank, and the cosmetics giant L'Oréal further dampened market sentiment. The Stoxx 600 index closed down by 0.3%, at 518.84 points. #European Stock Market Review#

The German DAX 30 index closed down by 55.16 points, a decrease of 0.28%, at 19,380.45 points; the UK's FTSE 100 index closed down by 49.10 points, a decrease of 0.59%, at 8,257.44 points; the French CAC 40 index closed down by 37.62 points, a decrease of 0.50%, at 7,497.48 points; the Euro Stoxx 50 index closed down by 17.86 points, a decrease of 0.36%, at 4,921.45 points; the Spanish IBEX 35 index closed up by 36.15 points, an increase of 0.31%, at 11,868.85 points; the Italian FTSE MIB index closed down by 44.52 points, a decrease of 0.13%, at 34,689.00 points.

Commodity Market

On Wednesday, the price of spot gold turned down after reaching a historical high, with the gold price falling nearly $50 from its peak.

Analysts pointed out that the strengthening of the US dollar and US Treasury yields, coupled with a reduction in tensions in the Middle East, were the main reasons for the significant drop in gold prices on Wednesday. Furthermore, the recent rapid rise in gold prices, with technical indicators showing an overbought condition, led some investors to take profits.

Spot gold reached a record high of $2,758.45 per ounce during European trading on Wednesday. However, gold prices then plummeted, with the lowest price in New York trading at $2,708.56 per ounce.

As of Wednesday's close, spot gold plummeted by $33.44, a daily decrease of 1.22%, at $2,715.24 per ounce.

Bob Haberkorn, a senior market strategist at RJO Futures, stated that the market saw some profit-taking transactions, and Treasury yields are rising. Considering the direction of yields, it will be difficult for gold to rise.

Bloomberg in the United States pointed out that technical indicators show that the recent rise may have been too strong, with the 14-day Relative Strength Index indicating that gold is overbought, leading to a correction in gold prices.

The US dollar index is close to a three-month high, reducing the attractiveness of gold to holders of other currencies, while US Treasury yields have climbed to a three-month peak.Saxo Bank's Head of Commodity Strategy, Ole Hansen, noted that this is related to the uncertainty brought about by the rising debt burden in the United States, "They also have to issue tens of billions of dollars in debt to a relatively thin and tight market before the election."

In terms of silver, spot silver closed down 3.36% on Wednesday, at $33.677 per ounce.

Regarding crude oil, international crude oil futures prices closed lower on Wednesday. Data showed that the increase in U.S. crude oil inventories last week exceeded expectations, putting pressure on oil prices.

The price of West Texas Intermediate (WTI) crude oil futures for delivery in December at the New York Mercantile Exchange fell by 97 cents, a decrease of 1.35%, to close at $70.77 per barrel.

The price of Brent crude oil futures for delivery in December at the European Intercontinental Exchange fell by $1.08, a decrease of 1.42%, to close at $74.96 per barrel.

The U.S. Energy Information Administration (EIA) said on Wednesday that as of the week ending October 18th, U.S. crude oil inventories increased by 5.5 million barrels, rising to 426 million barrels, exceeding the average analyst expectation of an increase of 270,000 barrels.

Matt Smith, Chief Analyst at Kpler in the United States, said that commercial crude oil inventories of 426 million barrels have only decreased by 500,000 barrels so far this year, while 30 million barrels have been transferred to the Strategic Petroleum Reserve (SPR) during the same period. Due to the already lower prices on Wednesday, "this report did not stimulate any buying interest in the market at all."