Gold prices experienced a modest increase on Monday following a significant rally, buoyed by expectations of additional rate cuts by the U.S. Federal Reserve and safe-haven demand stemming from the ongoing government shutdown in Washington. Investors are also looking ahead to crucial U.S.-China trade discussions.
Spot gold was recorded at $4,259.84 per ounce, reflecting a rise of 0.3%. In the futures market, December gold contracts surged by 1.5%, reaching $4,275 per ounce. Meanwhile, spot silver prices rose by 0.5% to $52.12, managing a slight recovery after a notable drop of 4.4% on Friday, despite having touched a record high of $54.47 earlier that same day.
Commodity strategy head Ole Hansen from Saxo Bank expressed optimism about the gold market, noting that prices remain steadfast above the key psychological levels of $4,000 for gold and $50 for silver. He indicated that this stability would likely prevent significant liquidation from long positions, characterizing the gold market as still very bullish.
The backdrop of the U.S. government shutdown continues to lend support to gold prices. The impending meeting between U.S. President Donald Trump and Chinese President Xi Jinping is also a focal point. Trump recently suggested that his proposed 100% tariffs on Chinese goods would be unsustainable, signaling a potential shift in trade negotiations.
Gold has performed exceptionally well this year, achieving multiple record highs, including a peak of $4,378.69 last week. The metal gained traction following the U.S. administration’s threats of increased tariff rates concerning China’s export controls on rare earth materials. However, it witnessed a decline of over 1.8% on Friday following Trump’s comments about the unsustainability of the tariff plan.
Data on U.S. consumer prices, which was postponed due to the current government shutdown, is anticipated to be released on Friday, just ahead of the Federal Reserve’s policy meeting on October 28-29. Analysts expect the data to show core inflation maintaining at 3.1% for September. The Fed is widely believed to be on the verge of implementing another quarter-point interest rate cut.
Additionally, China’s economic growth has slowed to its lowest rate in a year during the third quarter, fueled by ongoing issues within the property market, which has emerged as a significant factor supporting gold’s appeal. Hansen commented on the situation, emphasizing that the weaknesses in China’s economy are a crucial element bolstering the gold market.
