Concerns about the demand outlook drag down oil prices, the U.S. government shutdown breaks a record, and gold prices fall nearly 2%

Basic news

On Wednesday (November 5, Beijing time), spot gold was trading around $3,938 per ounce. Gold prices fell on Tuesday, affected by the strengthening of the U.S. dollar and weakening market expectations for an interest rate cut by the Federal Reserve. At the same time, the U.S. federal government shutdown has exceeded historical records; U.S. crude oil traded at around $60.35 per barrel. Oil prices closed lower on Tuesday, dragged down by the strengthening of the U.S. dollar and concerns about the outlook for oil demand.

Stock Market

U.S. stocks suffered a sharp sell-off on Tuesday, with all three major stock indexes closing lower. The S&P 500 and Nasdaq both posted their biggest one-day losses since October 10, reflecting growing concerns about overvaluation.

The Dow Jones Industrial Average closed down 0.53% at 47085.24 points; the S&P 500 Index closed down 1.17% at 6771.55 points; the Nasdaq Index closed down 2.04% at 23348.64 points.

The decline was triggered by warnings from the CEOs of major banks such as Morgan Stanley and Goldman Sachs, raising alarm about potential bubbles. Previously, driven by the artificial intelligence craze, the S&P 500 Index had hit new highs repeatedly.

The technology sector caused a major drag on the Nasdaq index, falling 2.3%, the largest decliner in the S&P 500 index. Six of the closely watched "Tech Seven" stocks related to artificial intelligence fell. The Philadelphia Semiconductor Index also fell sharply by 4.0%.

Analysts pointed out that investors appear to be more worried about valuation issues than before. The share prices of many www.xmaccount.companies have become too high despite their earnings performance.Good but not "outstanding" levels, prompting investors to take profits. JPMorgan Chase CEO Dimon has also previously warned that there is a risk of a sharp correction in the stock market in the next six months to two years.

The U.S. federal government shutdown has entered its 35th day, tying a historical record. The lack of official economic data makes the market more dependent on employment reports released by private institutions such as ADP. Investors are carefully analyzing www.xmaccount.comments from Federal Reserve officials for clues on the direction of monetary policy.

Gold Market

Gold prices fell sharply by nearly 2% on Tuesday, affected by the strength of the U.S. dollar and weakening market expectations for a rate cut by the Federal Reserve. Spot gold closed at $3,940.75 per ounce, down 1.5%; U.S. gold futures for December delivery fell 1.3%, settling at $3,960.50.

The main pressure for the fall in gold prices came from the US dollar, with the US dollar index hitting a three-month high that day. Market analysis pointed out that the recent strength of the U.S. dollar and the pressure on gold are rooted in traders lowering their expectations for the Federal Reserve to cut interest rates again in December. Although the Fed cut interest rates last week, Powell suggested it might be the last time this year. Currently, the interest rate futures market shows traders believe the probability of a rate cut in December has dropped to 71% from more than 90% a week ago.

At the same time, the U.S. federal government continues to be shut down, preventing the release of key official economic data. This situation will make investors pay more attention to the ADP private employment report due to be released on Wednesday for economic clues. In addition, Fed officials are divided on how to respond to the current data gap.

Other precious metals also generally closed lower: spot silver fell 1.5% to US$47.32 per ounce; platinum fell 1.8% to US$1,538.05; palladium suffered the largest decline, down 3.1% to US$1,400.30.

Oil market

Affected by multiple factors, international oil prices closed lower on Tuesday. Brent crude oil futures fell 0.7%, settling at $64.44 a barrel; U.S. crude oil futures fell 0.8%, settling at $60.56.

The decline in oil prices was mainly due to pressure from two aspects: on the one hand, the US dollar strengthened to a four-month high; on the other hand, weak manufacturing data triggered market concerns about the outlook for global oil demand.

Analysts pointed out that oil prices are feeling the pressure from the high valuation of the U.S. dollar and the ongoing U.S. government shutdown. Meanwhile, sharp losses on Wall Street also heightened concerns about the economic outlook and domestic fuel demand.

In terms of oil-producing countries, OPEC+ agreed on Sunday to suspend production increases in the first quarter of next year. This decision was interpreted by the market as the alliance's concerns about potential oversupply. At the same time, OPEC's production growth in October has slowed significantly www.xmaccount.compared with the previous period.

Global oil demand is expected to keep growing until 2040 and only after that as energy security concerns and a lack of political coordination will slow emissions reduction efforts, Total Energy forecast in its annual report.will gradually decrease.

Foreign Market

The U.S. dollar strengthened across the board on Tuesday, rising to a four-month high against the euro, mainly because policy differences within the Federal Reserve cast doubt on market expectations for another interest rate cut this year. At the same time, global risk sentiment deteriorated, pushing investors to seek safe haven in the U.S. dollar.

The U.S. dollar index exceeded the 100 mark for the first time since early August. The euro fell for a fifth straight session against the dollar, falling to $1.1483, its weakest level since August 1. USD/JPY fell slightly to 153.60 yen, although the yen and Swiss franc, both safe-havens, remained firm, but the yen itself was still hovering near eight-and-a-half-month lows. Market strategists pointed out that although the media often discusses the "death of the U.S. dollar," the U.S. dollar remains the most reliable safe-haven asset among investors during times of market turmoil.

This shift in market sentiment to risk aversion also echoes the decline in the stock market and the popularity of government bonds. In this environment, the www.xmaccount.commodity currency Australian dollar came under significant pressure, falling 0.8% to $0.649, as the Reserve Bank of Australia kept interest rates unchanged and expressed caution about further easing.

Changes in Fed policy expectations are the core factor driving the strength of the US dollar. After cutting rates as scheduled last week, Chairman Powell signaled that another move in December was not inevitable, causing traders' expectations for a rate cut in December to drop sharply to 65% from 94% a week ago. The continued shutdown of the U.S. government has led to a lack of economic data, making the different views of Federal Reserve officials on the current economic situation the focus of market attention.

Despite the recent strong performance of the US dollar, some analysts have expressed doubts about the sustainability of its gains. Deutsche Bank pointed out that the economic growth expectations of the United States and Europe have been raised simultaneously, and the growth gap between the two sides has been narrowing. This moderate global growth environment is not enough to support the continued strength of the US dollar.

In other currencies, the pound fell 0.9% to $1.3015 as the British finance minister emphasized the difficult economic background it faces such as high debt, low productivity and stubborn inflation.

As for the Japanese yen, although the Bank of Japan's decision to keep interest rates unchanged provided some support for it, its weak trend still prompted the Japanese Finance Minister to warn that the government was monitoring currency market dynamics with a high sense of urgency. The current yen exchange rate is gradually approaching the level that previously triggered market intervention by Japanese authorities in 2022 and 2024.

International News

The U.S. government shutdown will break records

On November 4, local time, the U.S. Senate once again failed to advance a temporary federal government funding bill that had been passed by the House of Representatives and proposed by the Republican Party. This means that the current round of federal government "shutdown" that began on October 1 is about to break the historical record of 35 days of "shutdown" from the end of 2018 to the beginning of 2019, becoming the longest-lasting government "shutdown" in U.S. history. The vote that day once again failed to reach the 60 "threshold" required for passage, and the final vote result was 54 votes in favor and 44 votes in favor.Vote against. Three Democratic senators voted in favor and one Republican senator voted against. This is also the 14th time the Senate has failed to end the government shutdown.

Ukraine: Will set up arms export offices in Germany and Denmark

Ukrainian President Zelensky claimed on November 3 that Ukraine will set up arms export and joint arms production offices in Berlin, Germany and Copenhagen, Denmark this year to raise funds to produce weapons that are in short supply in Ukraine. Ukrainian President Zelensky: "We will set up offices in the capitals of Germany and Denmark to handle joint arms production and arms exports. We will sell those weapons that we can sell in order to raise more funds for the manufacture of weapons that are currently in short supply."

US Media : The Trump administration is considering taking control of Venezuela’s oil fields

According to the New York Times, the Trump administration has formulated a number of military action plans against Venezuela, including direct strikes against the forces protecting President Maduro and possible actions to seize control of the country’s oil fields. Trump has yet to decide whether and how to proceed, and has shown an unwillingness to put U.S. troops at risk or suffer political consequences. Senior advisers are pushing for tougher measures, including ousting Maduro. The government has asked the Justice Department for legal guidance on the legality of expanding military operations beyond counternarcotics missions into broader operations. Such legal opinions may be intended to provide a legal basis for action against Maduro without requiring congressional authorization or a formal declaration of war.

The European www.xmaccount.commission adopted the 2025 EU enlargement plan

On November 4, local time, the European www.xmaccount.commission issued an announcement stating that the www.xmaccount.commission adopted the EU's annual enlargement plan that day and conducted a www.xmaccount.comprehensive assessment of the progress made by each expansion partner in the past year. The program reiterates that the enlargement process remains an important matter on the EU's priority agenda. The plan also confirms that the accession of new member states is just around the corner. Montenegro, Albania, Ukraine, Moldova, Serbia, North Macedonia, Bosnia and Herzegovina, Turkey and Georgia have all made progress in their respective EU accessions.

Fed Bowman: Banks should be able to participate in digital asset businesses if they wish

Fed Governor Bowman said on Tuesday that regulators are also studying capital surcharges on big banks and are proposing changes to stress tests and a key rule called the "enhanced supplementary leverage ratio." In addition to bank capital plans, the Federal Reserve is weighing next steps regarding cryptocurrencies following the passage of the GENIUS Act. The bill requires stablecoin issuers to formally register and hold sufficient U.S. dollar reserves. Bowman has previously said the agency is soliciting input on how best to implement new stablecoin regulations, and on Tuesday stressed that it was “critical” that banks should be able to participate in the digital asset business if they wanted to. "We need to ensure that banks are not left behind and that the digital assets on their balance sheets are effectively segregated from regular business activities," she said. Bowman noted that officials need to satisfy customers while ensuring banks operate safely and soundly.Demand for new services.

As the U.S. government’s “shutdown” continues, the Department of Transportation warns that it may be forced to close some airspace

On November 4, local time, U.S. Transportation Secretary Duffy warned that if the government’s “shutdown” continues, the Department of Transportation may be forced to close some airspace to cope with personnel shortages and aviation safety pressures. The United States has long faced a shortage of air traffic controllers, and many air traffic controllers were forced to work overtime before the government shutdown. Since the "shutdown" of the federal government, approximately 13,000 air traffic controllers and approximately 50,000 employees responsible for airport security have been forced to work without pay, and an increasing number of employees are taking sick leave.

Domestic News

China’s www.xmaccount.commodity price index in October was announced to have increased month-on-month for six consecutive months

The China Federation of Logistics and Purchasing announced today (5th) China’s www.xmaccount.commodity price index for October. Judging from the operation of the index, it has achieved month-on-month increases for six consecutive months, and the increase has significantly expanded www.xmaccount.compared with the previous month. This shows that as the country continues to release the effectiveness of a series of policies such as stabilizing growth, and international trade tensions have eased, business confidence has been further enhanced and the www.xmaccount.commodity market sentiment has continued to rebound. China's www.xmaccount.commodity price index in October was 113.2 points, up 1.2% month-on-month, achieving month-on-month increases for six consecutive months. Among the 50 www.xmaccount.commodities monitored by the China Federation of Logistics and Purchasing, 16 www.xmaccount.commodities saw price increases month-on-month in October. Among them, electrolytic copper, corrugated paper and coking coal were the top gainers, rising by 6.9%, 6% and 6% respectively from the previous month.

The above content is all about "[XM Foreign Exchange Decision Analysis]: Concerns about demand prospects drag down oil prices, the U.S. government shutdown broke a record, and gold prices fell nearly 2%". It was carefully www.xmaccount.compiled and edited by the editor of XM Foreign Exchange. I hope it will be helpful to your trading! Thanks for the support!

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