Expectations for interest rate cuts are rising, and multi-asset price fluctuations are intensifying

This week, the data released after the U.S. government shutdown was overall weak, coupled with the dovish signals released by Federal Reserve officials, the market's expectations for the Federal Reserve to cut interest rates in December sharply increased, the trend of the U.S. dollar suffered a setback, and the price of gold rose sharply. At the same time, the silver market also performed strongly due to tightening fundamentals, and markets such as U.S. stocks and crude oil also performed differently.

1. Gold and silver rose strongly as expectations for an interest rate cut by the Federal Reserve increased

Gold prices soared

Driven by tight supply chains, falling inventories, and rising expectations of an interest rate cut in December, the precious metals market exploded on Friday (November 28). Spot gold closed up 1.48% on Friday to US$4,219.29 per ounce, hitting an intraday high of US$4,226.83 per ounce. It rose 3.80% (US$154.39) this week and rose 5.42% (US$216.81) in November, rising for the fourth consecutive month.

Analysts believe that the core driving force of this round of market conditions is the reversal of policy expectations. Recently, Fed Governor Waller and New York Fed President Williams have released dovish signals, and the weak economic data after the U.S. government shutdown has made the market bet on an interest rate cut again in December. CME Group's "Fed Watch" tool shows that the market expects an 87% chance of a rate cut in December, much higher than last week's 50%. In addition, Fed Governor Milan pointed out that the deterioration of the job market may require more interest rate cuts. Waller said that the weak job market supports another 25 basis points interest rate cut in December. San Francisco Fed President Daley also expressed support for an interest rate cut next month.

Generally, when interest rates are low and geopolitical tensions arise, gold has a relative advantage. Peter Grant, vice president of Zaner Metals, said the Fed’s dovish www.xmxmxm.cnments revived December’sInterest rate cuts are expected, and data have not shaken this view. Bart Melek of TD Securities said that the market is convinced that the U.S. economy is slowing down and an interest rate cut in December is almost a foregone conclusion. Low interest rates are good for gold and attract investors to increase their positions. ActivTrades analyst Ricardo Evangelista believes that economic uncertainty, geopolitical instability and loose expectations will support gold prices in the short term. Julius Baer analyst Carsten Menke said that the positive factors for the gold market have basically remained unchanged, including lower interest rates due to slowing economic growth and a weaker dollar, safe-haven demand and strong central bank buying.

Research institutions are generally optimistic about the prospects of gold. Deutsche Bank raised its 2026 gold price forecast from US$4,000/ounce to US$4,450/ounce, citing the stabilization of investor capital flows and the demand for increased holdings by global central banks.

Silver has entered a "structural bull market"

Silver performed strongly this week, rising strongly by 5.56% on Friday to close at US$56.35 per ounce. It once hit a record high of US$56.519 per ounce during the session. It rose 12.72% this week, the strongest weekly performance since 2020.

Silver’s rise is not only due to risk aversion and macro expectations, but also driven by tightening fundamentals. The global silver market has been in supply shortage since last year, and industrial demand, especially from the new energy, photovoltaic and electronics industries, has grown much faster than mine output. Institutional data shows that over-the-counter silver inventories in London have decreased significantly due to supply chain disruptions, and silver inventories on the Shanghai Gold Exchange have dropped to the lowest level in ten years. In the United States, because silver is classified as a critical metal and may face tariffs, domestic inventories remain high, and global silver mine supply is expected to be difficult to catch up with demand until 2026.

Kitco senior analyst Jim Wyckoff said that the technical form of silver has improved and breaking through historical highs has attracted a large amount of funds to do long, which will continue to push up prices. At the same time, the gold-silver ratio fell to 74.75, the lowest since May 2024, indicating that silver prices outperformed gold.

2. The U.S. dollar had its worst weekly performance in five months

The U.S. dollar fell slightly on Friday and had its worst performance this week since the end of June. The U.S. market was closed for Thanksgiving on Thursday, and trading was light on Friday. Trading on the CME Group was suspended for several hours, affecting market liquidity. The U.S. dollar index fell 0.7% this week, its worst weekly performance since June 27.

Credit Agricole's foreign exchange strategist said that the market expects the Federal Reserve to cut interest rates in December, and only better-than-expected data can support the dollar. Eric Theoret, foreign exchange strategist at Scotiabank, said that the data after the government shutdown were generally soft and tended to support interest rate cuts.

In terms of major currency pairs, USD/JPY fell 0.13% this week to 156.15. Bank of Japan Governor Kazuo Ueda will speak next Monday, and traders will focus on whether he hints at a rate hike at the December meeting. EUR/USD rose 0.71% this week to 1.1595; GBP/USD rose 1.04% to 1.3236.

3. U.S. stocks surged for the week

ThanksgivingIn the shortened trading day after the holidays, the U.S. stock market closed collectively higher on Friday, continuing its rebound momentum. However, the Nasdaq index still fell in November, ending its seven-month winning streak. At the close on Friday, the Dow Jones Industrial Average rose 0.60% to 47716.42 points; the S&P 500 Index rose 0.54% to 6849.09 points; the Nasdaq www.xmxmxm.cnposite Index rose 0.65% to close at 23365.69 points, rising for the fifth consecutive day.

Zacks Investment Management client portfolio manager Brian Mulberry said that market sentiment has turned to risk appetite because the market is 80%-85% sure that the Federal Reserve will cut interest rates at its December meeting. Investors' expectations for interest rate cuts have increased. New York Fed President Williams said last week that the federal funds rate range may be further adjusted in the short term, strengthening the easing judgment.

The major stock indexes performed well this week, with the Dow rising more than 3%, the S&P 500 rising nearly 4%, and the Nasdaq rising more than 4%. The overall market sentiment improved on the eve of Thanksgiving, and AI-related sectors attracted attention and became the main force in the rebound of the technology sector.

Before early trading on Friday, the Chicago Mercantile Exchange (CME) experienced a long-term technical failure, and global futures and options trading was temporarily interrupted. It returned to normal around 8:30 a.m. ET. Affected by the Thanksgiving holiday, trading volume was low and the impact of the interruption was limited.

As November www.xmxmxm.cnes to an end, many investment banks have released their outlook for the U.S. stock market. Deutsche Bank predicts that the S&P 500 will rise to 8,000 points by the end of 2026, and HSBC and JPMorgan Chase expect the S&P 500 to hover around 7,500 points.

4. Crude oil closed higher for the week

WTI crude oil prices fell slightly on Friday, but still closed higher this week. It rose 1.7% during the session on Friday and finally closed below $59/barrel as U.S. President Trump held a phone call with Venezuelan leader Maduro last week to discuss a potential meeting, and the easing of tensions between the two countries reduced oil risk premiums. WTI crude oil for January delivery fell 0.2% on Friday to close at $58.55 per barrel, rising 0.84% ​​this week.

A representative of the OPEC Alliance of Oil Producing Countries said that the organization will hold an online meeting on Sunday and may maintain its plan to suspend production increases in early 2026. The focus of the meeting may be on long-term assessment of the production capacity of member countries.

5. Summary of this week’s important news

The policies of the new Federal Reserve Chairman are expected to affect the US dollar

Investors are betting that the most popular candidate for the new Federal Reserve Chairman may adopt more dovish policies, dragging down the outlook for the US dollar. Bloomberg reports White House economic adviser Hassett as the frontrunner. Marex analyst Edward Meir said the market focus has shifted from the dollar to a December interest rate cut. Meir mentioned that there are rumors in the market that the White House may soon nominate the next chairman of the Federal Reserve, and Hassett is the most vocal. Gold received additional support as Hassett and Trump argued that interest rates should be lower than those set by Powell. U.S. Treasury Secretary Bessent says Trump is likely to make an announcement before ChristmasNominated. Corpay market strategist Karl Schamotta said the U.S. market is concerned about the rising possibility that the Federal Reserve will launch a more active easing cycle.

The Bank of Japan is expected to raise interest rates.

British Reuters reported on Wednesday that sources said the Bank of Japan was "preventing" the market from raising interest rates as soon as next month. The Bank of Japan has returned to more hawkish rhetoric as concerns over a depreciation of the yen mount and political pressure wanes. Two people familiar with the central bank's thinking said the change in language over the past week shifted the focus from concerns about the U.S. economy to the risk of inflation from a weaker yen, and the www.xmxmxm.cnments were meant to remind markets that a rate hike in December was a possible option. The shift came after a key meeting between Prime Minister Sanae Takaichi and central bank governor Kazuo Ueda, which removed immediate political resistance to the new government's interest rate hikes. However, it is still difficult to decide whether to raise interest rates in December or January, because the Fed's interest rate decision is announced a week before the Bank of Japan meeting, which will affect the trend of the yen. However, two sources said that recent speeches by many officials reflect that more and more people within the central bank believe that the weakening of the yen is a trend and may push up inflation even more. Naomi Muguruma, chief bond strategist at Mitsubishi UFJ Morgan Stanley Securities, said the Bank of Japan intends to send a signal to ensure that the market will not be caught off guard by raising interest rates in December. A Reuters survey showed that a slight majority of economists expect the Bank of Japan to raise interest rates at its December 18-19 meeting, with all respondents predicting that interest rates will be raised to 0.75% by March next year.

U.S. retail sales slowed in September

As the government shutdown caused a large amount of economic data to be suspended, the first official consumer spending data in two months was ushered in on Tuesday. The results showed that U.S. retail sales cooled significantly in September. U.S. Census Bureau data showed that retail sales increased by 0.2% in September from the previous month, lower than the 0.4% estimate, and increased by 0.6% in August. Among them, the "control group" decreased by 0.1% month-on-month, the previous value was an increase of 0.6%, and economists expected an increase of 0.3%. Retail sales excluding automobiles increased 0.3% in September, and sales excluding automobiles and gasoline rose 0.1%. The report coincides with the U.S. entering the holiday consumption season, and its importance has increased in the absence of official third-quarter GDP data. The U.S. Bureau of Economic Analysis announced the cancellation of the preliminary GDP value for the third quarter and rescheduled the release of the secondary GDP valuation and the preliminary corporate profit value at an optional date.

Small non-farm ADP data shows a weakening job market

On Tuesday, payroll processing www.xmxmxm.cnpany ADP released data showing that the U.S. labor market has weakened further, with layoffs continuing to accelerate over the past four weeks. ADP tracking data points out that U.S. private www.xmxmxm.cnpanies have lost an average of 13,500 jobs per week in the past four weeks, significantly higher than the 2,500 www.xmxmxm.cn job losses per week announced a week ago, indicating rising pressure for layoffs. As the government shutdown affects the release of official data, "alternative data" such as ADP fills the www.xmxmxm.cnrmation gap. The U.S. Bureau of Labor Statistics and Bureau of Economic Analysis have released new data release schedules, but key data such as the monthly non-farm payrolls report will not be released until December. The next Federal Reserve meeting will be held on December 9-10, and the decision-makingThere is a lack of www.xmxmxm.cnmonly used forecast data, but many officials have recently called for an interest rate cut, and the market is generally betting on an interest rate cut at next month's meeting. Goldman Sachs Chief Economist Jan Hatzius said that the next employment report will be postponed to December 16, and the CPI will be released on December 18. There are almost no factors that will hinder the Federal Reserve's action (cutting interest rates) on December 10.

U.S. consumer confidence plummets

On Tuesday, a survey by the Conference Board showed that U.S. consumers' confidence in economic conditions and future prospects has worsened, and concerns about employment prospects have increased. The consumer confidence index plummeted to 88.7 in November, a sharp drop of 6.8 points from the previous month and the lowest since April this year. Economists expected 93.2. Among them, the future expectations index plummeted 8.6 points to 63.2, and the current conditions index fell 4.3 points to 126.9. Dana Peterson, chief economist of the Conference Board, said consumers are more pessimistic about the business environment in the next six months and have negative expectations for the labor market in mid-2026. Household income growth is expected to shrink sharply after six consecutive months of strength.

The Federal Reserve’s Beige Book reveals triple pressures

The Federal Reserve’s Beige Book released on Wednesday showed that the U.S. job market weakened slightly in mid-November, with www.xmxmxm.cnpanies in many places scaling back hiring plans, reducing working hours, and some beginning to lay off workers. Consumer spending continues to cool, and price pressures ease but still rise modestly, increasing uncertainty about the Federal Reserve's interest rate decision. As a "data-light" report based on business feedback, the Beige Book is particularly critical in the context of the cancellation of the October employment report and the delay of November data due to the government shutdown. The report shows that as of mid-November, overall employment in the United States has "slightly declined", and about half of the 12 Federal Reserve districts reported weakening demand for corporate employment. Enterprises in most regions tend to freeze recruitment, recruit employees through replacement and reduce their manpower through natural attrition. Many enterprises adjust employee working hours to cope with changes in demand. A few www.xmxmxm.cnpanies said that artificial intelligence technology has impacted entry-level positions or improved employee efficiency and suppressed recruitment demand. The Beige Book shows that consumer spending continues to fall. Middle-income households are cautious, while high-income consumer spending is resilient. Overall consumption is declining but high-end retail demand is solid. Some travel and leisure industry contacts feel that consumers are restrained in free spending.

Japanese data releases signal of central bank decision

Japanese data released on Friday showed that inflation in Tokyo was higher than expected and industrial output unexpectedly rose, raising the possibility of the Bank of Japan raising interest rates as soon as December. On Friday, Japan's Ministry of Internal Affairs and www.xmxmxm.cnmunications announced that the Consumer Price Index (CPI) excluding fresh food in the Tokyo area rose 2.8% year-on-year in November. The increase in electricity costs accelerated to offset the slowdown in processed food price increases. It was higher than the 2.7% median forecast by economists and was the same as last month's reading. After further excluding energy, the indicator also rose by 2.8%, and service prices increased by 1.5% year-on-year. Rice prices rose 37.9%, continuing to slow down after hitting a record high in April. These data serve as leading indicators of national price trends and may enhance the confidence of the Bank of Japan. Taro Saito, director of economic research at NLI Research Institute, said the data did not prevent the central bank from considering raising interest rates, benchmarkThe scenario is to raise interest rates in January, but it depends on the trend of the yen and political factors. Bloomberg economist Taro Kimura said Tokyo's November CPI data showed that inflation is sticky, supported by wage growth, inflation expectations and the withdrawal of energy subsidies. The reading will increase confidence that price increases are sustainable and there is reason to reduce stimulus measures as soon as December. Other data released on Friday showed that Japan's industrial output increased by 1.4% month-on-month in October, higher than the expected decrease of 0.6%, and increased by 1.5% year-on-year. Automobile production rebounded, and artificial intelligence demand drove stronger www.xmxmxm.cnrmation and www.xmxmxm.cnmunication equipment output. Kimura said the data showed that the manufacturing industry was recovering from the impact of U.S. tariffs, reinforcing the Bank of Japan's judgment at its October meeting that downside risks to economic growth had eased.

Canada’s economy unexpectedly surged in the third quarter

Data released by Statistics Canada showed that the Canadian economy grew by 2.6% on an annual basis in the third quarter, much higher than the 0.5% expected by the Bank of Canada and the market, avoiding a technical recession. The growth rate is mainly due to the improvement of trade conditions, with imports falling sharply and exports rebounding slightly. Increased government capital expenditures also support growth. However, the stagnation of corporate investment shows that domestic demand is weak. Douglas Porter, chief economist of the Bank of Montreal, said that the data were not all positive. The contribution of www.xmxmxm.cn exports was masked by sluggish domestic demand. The significant reduction in imports was the main factor driving the growth of www.xmxmxm.cn exports, with exports increasing by only 0.7%. Although this quarter's rebound after shrinking in the second quarter has allowed Canada to avoid the definition of recession, the growth momentum has not continued. The official October GDP quick forecast shows that the economy may decline by another 0.3%, suggesting that the recovery is short-lived and the momentum is weakening. Capital Economics North American economist Bradley Saunders said that if there is no significant rebound in November, Canada's economic growth rate will be difficult to reach the 1% annualized forecast given by the central bank.

The United States launches the AI ​​"Genesis Mission" plan

U.S. President Trump signed an executive order on Monday afternoon, announcing the launch of the "Genesis Mission" plan, aiming to accelerate the research, development and scientific application of artificial intelligence in the United States. The plan will inject momentum into the U.S. AI www.xmxmxm.cnpetition by expanding www.xmxmxm.cnputing resources, opening up massive federal data sets, and promoting the practical application of AI in scientific research. The executive order states that the Genesis mission will accelerate scientific discovery, strengthen national security, ensure energy superiority, improve labor efficiency and amplify returns on R&D investments. Michael Kratzios, director of the White House Office of Science and Technology Policy, is leading the project. The executive order requires U.S. Secretary of Energy Chris Wright to establish the "American Science and Security Platform" to centrally build the infrastructure required for AI research and development, provide scientific researchers with the www.xmxmxm.cnputing power and federal data resources needed to train AI models, build a unified AI platform, use federal scientific data sets to train basic scientific models, develop AI agents to verify hypotheses, automate scientific research processes, and accelerate scientific breakthroughs.

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