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Spot gold has just surpassed the $4,130.00/ounce mark, now trading at $4,130.02/ounce, up 0.47% on the day; the main COMEX gold futures contract is now trading at $4,153.90/ounce, up 0.32% on the day.

On Thursday, Nordic power forward contracts rose, driven by strength in European natural gas and German electricity markets. The region is highly dependent on hydropower, and weather forecasts indicate drier conditions ahead, further supporting electricity prices. The Nordic base load power contract for next quarter increased by 2.05 euros or 1.87%, closing at 111.5 euros per megawatt-hour. The annual contract for the following year rose by 0.9 euros or 1.34%, settling at 68.1 euros per megawatt-hour. Analysts noted that tensions in the Middle East are spreading, and coupled with expectations of dry weather, Nordic electricity prices are likely to remain strong. Additionally, an attack on an oil tanker in the Strait of Hormuz has dampened expectations for LNG deliveries, pushing Dutch and UK natural gas prices to two-week highs.

⑴ The minutes of the European Central Bank’s September meeting, disclosed on Thursday, indicate that officials expect the final level of inflation in the eurozone may surpass previous forecasts. In a highly uncertain environment, it is crucial not to provide advance guidance on the interest rate path. ⑵ The minutes explicitly state that the core principle is not to signal any future policy actions and to maintain flexibility across all policy options. ⑶ During this meeting, the European Central Bank implemented a 25-basis point rate hike, with all members unanimously recognizing that there are upside risks to inflation. ⑷ Due to multiple risks and diverse scenarios regarding the inflation outlook, the central bank merely confirmed the current risk situation and did not pre-commit to any future interest rate direction.

(1) Brent crude oil rose by 4.8% to $104.2 per barrel, with heightened concerns over inflation due to increased supply disruptions in the Middle East. The market has adjusted expectations for continued rate hikes by the European Central Bank, leading to a collective rise in Eurozone government bond yields and putting pressure on bonds from high-debt countries. (2) The yield on French 10-year government bonds increased by 9 basis points to 4.94%, nearing the 24-year high set previously. The yield spread between French and German 10-year government bonds widened by 4 basis points to 141 basis points, as the market grows concerned about French debt, fiscal deficits, and political uncertainties arising from the 2027 general election. (3) The benchmark German 10-year government bond yield for the Eurozone rose by 5 basis points to 3.52%, outperforming other Eurozone bonds and underscoring its safe-haven status. (4) The yield on German 2-year government bonds simultaneously rose by 5 basis points to 3.07%, with short-term rates clearly influenced by expectations of further European Central Bank rate hikes. (5) François Villeroy de Galhau, head of the Bank of France, stated that the current geopolitical shocks driving inflation are gradually evolving into financial shocks. He also noted that France, at this stage, does not require special support from the European Central Bank. (6) The yield on the US 10-year Treasury note rose by 7 basis points to 5.33%, maintaining high global financing costs and exerting spillover pressure on the European bond market.