Gold (XAU/USD) surged to a new record high of around $4,059–$4,060 per ounce in early Asian trading Monday, extending a two-day rally as investors piled into safe-haven assets. The move follows renewed U.S.-China trade friction, a prolonged U.S. government shutdown, and rising expectations for Federal Reserve rate cuts later this year.
Markets are now pricing in two additional Fed rate cuts in 2025, according to the CME FedWatch Tool, with probabilities at 96% for October and 87% for December. Lower borrowing costs tend to weaken the U.S. dollar, boosting demand for non-yielding assets like gold.
Meanwhile, the greenback’s decline and lingering global political uncertainty have strengthened gold’s appeal. Despite overbought technical conditions, the metal’s strong momentum suggests continued demand amid shifting macroeconomic dynamics.
Fed, Tariffs, and Shutdown Shape Market Mood
Investor sentiment wavered sharply last week after President Donald Trump threatened to impose a 100% tariff on Chinese imports and restrict exports of key U.S. software beginning November 1. Beijing responded by accusing Washington of “double standards” and warned of “unspecified countermeasures.”
Trump later sought to cool tensions, writing on Truth Social, “The U.S.A. wants to help China, not hurt it.” His softened tone briefly lifted global risk appetite, but traders remain cautious ahead of a potential Trump–Xi meeting later this year.
At home, the U.S. government shutdown entered its third week, with no deal in sight. Congress remains deadlocked, delaying key spending votes, while thousands of federal employees face furloughs. The extended stalemate is adding to concerns about fiscal strain and political instability.
Further heightening risk sentiment, Trump warned that the U.S. may send Tomahawk missiles to Ukraine if Russia refuses to end its war—an escalation that renewed geopolitical uncertainty and further fueled demand for gold.
Key drivers supporting gold:
- Fed rate cuts priced in for October and December
- U.S.–China tariff tensions intensifying
- Prolonged government shutdown pressuring confidence
- Geopolitical tensions boosting safe-haven demand
Technical Outlook: Bulls in Control
From a technical perspective, gold remains in an uptrend along a multi-week ascending support line. Friday’s rebound near the $3,965–$3,970 region has solidified bullish sentiment. Still, analysts caution that short-term overbought conditions could trigger a brief consolidation before the next leg higher.
A sustained move above $4,060 could open the door to $4,100, while dips toward $4,000 are likely to attract new buyers. Only a break below $3,965 would threaten the trend, signaling potential retracement toward $3,900.
Overall, with Fed policy easing, geopolitical risks, and softening global growth, gold’s fundamental backdrop continues to favor the bulls well into the fourth quarter.