Quick overview

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XAU/USD hits a new daily low in the $4,330 range, continuing its slide during the Asian session from near the all-time peak

Buyers are attracted to the US dollar for the third consecutive day,  which signals some profit-taking despite the daily chart being overbought. Additionally, a generally optimistic mood in the equity markets helps to reduce flows into the safe-haven precious metal.

The US dollar’s rally for the third day adds downward pressure on gold prices. The safe-haven metal is also being weakened by the global risk sentiment, which remains firm due to signs of easing US-China trade tensions.

US President Donald Trump said that imposing full tariffs on China was not feasible. Trump added that both countries would reach a great deal but warned that if no agreement is reached, China could face tariffs of 155 percent. This keeps the US-China trade negotiations next week in focus.

The CME Group’s FedWatch Tool shows that traders have nearly fully priced in a 25 basis point rate cut at both the October and December Federal Reserve meetings.  This could limit significant USD gains and help keep gold prices higher.

Investors seem worried that a prolonged US government shutdown could harm the economy.  the Senate voted Monday against reopening the government for the eleventh time with both sides still at an impasse,, extending the shutdown into its third week.

Additionally, Russian President Vladimir Putin reportedly reiterated his demand that Ukraine cede all of Donetsk Oblast as a condition for ending the war, even as he stated that Russia might be willing to relinquish some areas of occupied southern Ukraine. Furthermore, Trump mentioned on Sunday that the fighting lines should stay frozen in their current positions.