Quick overview

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The XAU/USD pair continues to rise in the early Asian session on Monday, reaching about $4,050 per ounce. Some support for the precious metal comes from the growing trade tensions between the US and China. Investors watch for clues about when the US government will reopen and publish information that will influence Fed policy.

 

US President Donald Trump’s announcement to impose new 100 percent tariffs on Chinese imports beginning on November 1 has contributed to the rally in the yellow metal. Trump threatened to impose tariffs on Chinese imports, and China threatened to retaliate if he didn’t back down.
Additionally, traders anticipate that the Fed will lower interest rates by 25 basis points (bps) each in October and December. Markets are pricing in a nearly 97 percent chance that the US central bank will lower rates by 25 basis points at its October meeting, while the odds of another rate cut in December are at 92 percent, according to the CME FedWatch tool.

Lower interest rates might support gold, a non-yielding precious metal, by lowering the opportunity cost of holding it. The US Retail Sales and Producer Price Index (PPI) reports, which are scheduled for release later on Thursday, will provide traders with additional guidance. In the short run, any indications of higher US inflation could strengthen the USD and have an impact on the price of commodities denominated in USD.

Federal Reserve Chair Jerome Powell will speak at the NABE annual meeting, which could provide new insights into monetary policy easing. Throughout the week, additional Fed representatives are planned to speak.

Trump and other world leaders are gathering in Egypt on Monday to talk about plans for a ceasefire in Gaza. In contrast to gold, Goldman Sachs warned of increased short-term volatility and downside risks, but stated on Sunday that silver prices were anticipated to rise in the medium term due to private investment flows.