Gold climbs on rate-cut bets, broader uncertainty; investors eye US-China trade talks

Gold prices rose by over 2% on Monday, buoyed by expectations of further US interest rate cuts and sustained safe-haven demand, as investors awaited upcoming US-China trade talks and inflation data out of the US this week.

Spot gold was up 2.3% at USD 4,346.39 per ounce, as of 1:47 p.m. ET (1746 GMT). US gold futures for December delivery settled 3.5% higher at USD 4,359.40 per ounce.

Gold prices notched a record high of USD 4,378.69 on Friday, but closed 1.8% lower — their steepest drop since mid-May — after comments from US President Donald Trump alleviated some concerns around US-China trade tensions.

Political and economic concerns are driving prices higher after Friday’s sharp sell-off, said CPM Group managing partner Jeffrey Christian.

“Our expectation is that the price is going to rise higher over the next several weeks and several months, and we wouldn’t be surprised at USD 4,500/oz soon,” he added.

The US government shutdown stretched to its 20th day on Monday, after senators failed for the tenth time last week to break the impasse. The shutdown has also delayed key economic data releases, leaving investors and policymakers in a data vacuum ahead of the Federal Reserve’s policy meeting next week.

US consumer price index data, delayed due to the shutdown, is scheduled for Friday.

Meanwhile, traders are pricing in a 99% chance that the Federal Reserve will cut interest rates next week, with another cut in December. Gold, a non-yielding asset, tends to do well in low-interest-rate environments.

Investors are also looking out for further updates on US-China trade talks, after Trump said on Friday that a planned meeting with Chinese President Xi Jinping would go ahead.

“I would not be surprised to see gold get to USD 5,000/oz at some point next year. That would be predicated on ongoing political problems and worsening political problems, which is actually what we have right now,” Christian said.

Spot silver rose 0.6% to USD 52.17 per ounce. The metal fell 4.4% on Friday, after hitting a record high of USD 54.47 earlier that day.

Elsewhere, platinum rose 1.9% to USD 1,640.90 per ounce and palladium gained 1.5% to USD 1,496.59 per ounce.

(Reporting by Noel John, Pablo Sinha and Kavya Balaraman in Bengaluru; Editing by Susan Fenton, Shailesh Kuber and Alan Barona)