Core Viewpoint - The Federal Reserve is expected to lower interest rates by 25 basis points during its two-day meeting, with significant political pressure from the Trump administration and internal divisions among policymakers [1][3][4]. Group 1: Economic Indicators and Risks - The U.S. government shutdown has led to delays in key economic data releases, creating uncertainty for the Federal Reserve's policy decisions [3]. - Inflation remains above the Fed's 2% target, with the Personal Consumption Expenditures (PCE) index rising from 2.3% in April to 2.7% in August, indicating potential inflationary pressures [3][4]. - The job market shows signs of weakness, with an average of only 29,000 new jobs added monthly from June to August, significantly below pre-pandemic levels [4][5]. Group 2: Federal Reserve's Policy Outlook - There is a notable division among Federal Reserve officials regarding the approach to interest rate cuts, with some advocating for caution due to inflation risks [4][6]. - Market expectations indicate a 90% probability of consecutive rate cuts in the remaining meetings of the year, with potential for 2-3 additional cuts in the following year [6][8]. - The Fed may signal an end to its quantitative tightening (QT) policy, with discussions around the adequacy of liquidity in the financial system [9][10]. Group 3: Labor Market and Consumer Spending - The labor market's current state is difficult to assess due to the absence of comprehensive employment data, raising concerns about potential consumer spending impacts if government employees face income disruptions [5][6]. - Despite hiring slowdowns, consumer income growth and retail spending remain resilient, although uncertainties from the government shutdown could lead to significant economic impacts [5][6].

Core Viewpoint - Recent fluctuations in international gold prices have led to significant declines, with a notable drop of 7.46% over two days, attributed to a combination of technical factors and geopolitical developments [2][3][4]. Group 1: Market Dynamics - The COMEX gold futures experienced a sharp decline, falling by $220 per ounce on October 21, with prices reaching $4064 per ounce by October 22 [2]. - The market was characterized by an overcrowded long position, leading to a "liquidation" scenario as investors rushed to exit their positions amid profit-taking [2][4]. - The geopolitical context, particularly the easing of tensions in the Russia-Ukraine conflict, has contributed to a sell-off in gold as a safe-haven asset [3][4]. Group 2: Geopolitical Influences - The announcement by Ukrainian President Zelensky regarding readiness to negotiate a ceasefire has shifted market sentiment towards a potential resolution of the conflict, impacting gold prices [3]. - Trump's discussions with Putin and the subsequent speculation about peace negotiations have further fueled market expectations, although actual progress remains uncertain [3][4]. Group 3: Technical Analysis - The recent surge in gold prices from $3400 to $4398 per ounce within two months indicated a significant overbought condition, leading to the current volatility [6]. - The trading volume in gold options has shifted, with a notable increase in put options, suggesting a bearish sentiment among investors [7][8]. Group 4: Economic Indicators - The market anticipates a high probability of interest rate cuts by the Federal Reserve, which has historically supported gold prices [9][10]. - Recent economic data indicating a tightening liquidity environment has raised concerns about the sustainability of gold's upward trajectory [10][11]. Group 5: Future Outlook - Analysts suggest that while short-term volatility may ease, underlying factors such as central bank policies and geopolitical tensions will continue to influence gold prices [11]. - The potential for gold to experience further declines exists, particularly if key support levels are breached, indicating a shift towards a more bearish market sentiment [10][11].

Group 1: Economic Conditions - The U.S. economy is facing a dual challenge of "low employment and high inflation," with a contradiction between weak hiring intentions and strong consumer spending [1] - Current inflation pressures are partly attributed to tariff policies leading to increased goods prices, rather than widespread economic overheating [1] - The labor market shows signs of concern, with reduced hiring potentially leading to higher unemployment rates, indicating a risk of economic downturn [4] Group 2: Monetary Policy and Quantitative Tightening - The Federal Reserve is nearing the end of its quantitative tightening (QT) policy, with ongoing monitoring of financial system liquidity, including repo rate fluctuations [3] - Historical experiences, such as the liquidity shortage during QT in September 2019, have prompted the Fed to introduce permanent repo tools to mitigate potential pressures [3] - The Fed's decision-making will remain data-dependent, with a gradual approach to interest rate cuts being favored by officials [5] Group 3: Internal Policy Debates - There is a notable divergence in risk assessments within the Federal Reserve, with some officials concerned about persistent inflation while others focus on labor market deterioration risks [1][5] - The internal policy debates are seen as beneficial, allowing officials to avoid the illusion of a "no-risk policy path" and to treat quarterly policy forecasts as dynamic probability distributions [4] Group 4: Global Implications - The current policy transition period is expected to test the resilience of the U.S. economy and will have implications for the global financial landscape through interest rate transmission mechanisms [7] - Investors anticipate a potential interest rate cut of 25 basis points at the end of October, but the long-term path will depend on evolving data and external uncertainties [7]