Gold (XAU/USD) retains its bullish bias through the early European session on Monday and trades around the $4,070 region, up 1.35% for the day amid a supportive fundamental backdrop. Concerns that a prolonged US government shutdown will affect the economic performance, along with fresh US-China trade tensions and persistent geopolitical risks, continue to drive safe-haven flows towards the commodity. Apart from this, dovish the US Federal Reserve (Fed) expectations turn out to be another factor acting as a tailwind for the non-yielding yellow metal.
Meanwhile, US President Donald Trump’s pivot on 100% China tariff eases market fears of a worsening trade conflict between the world’s two largest economies and triggers a fresh wave of the global risk-on trade. Furthermore, the emergence of some US Dollar (USD) dip-buying, following Friday’s downfall, could act as a headwind for the Gold price. Traders also seem reluctant amid thin liquidity on the back of a bank holiday in the US. Nevertheless, the lack of any meaningful selling suggests that the path of least resistance for the XAU/USD is to the upside.
Daily Digest Market Movers: Gold bulls retain control as safe-haven buying offsets modest USD strength
- The global risk sentiment took a turn for the worse on Friday after US President Donald Trump threatened an additional tariff of 100% on Chinese exports and announced new export controls on critical software effective November 1. In response, China accuses the US of double standards over the tariff threat and said that it could introduce its own unspecified countermeasures if the US president carries out his threat, adding that it was not afraid of a possible trade war.
- Trump, however, softened his stance over the weekend and posted on Truth Social that the US does not wish to hurt China. Trump added further that China’s economy will be fine and that both countries wish to avoid economic pain. Nevertheless, the escalating rhetoric fuels uncertainty over a potential meeting between Trump and Chinese President Xi Jinping later this year, pushing the Gold price to a fresh all-time peak during the Asian session on Monday.
- The US government shutdown is on track to extend into a third week as Congress remains deadlocked on a funding plan. Moreover, the Senate isn’t scheduled to hold any votes until Tuesday afternoon. Top House leaders signaled that there is virtually no appetite for their parties to cross the aisle and engage with the other side’s demands. Trump blamed Democrats for his decision to lay off thousands of federal employees, who began receiving notices on Friday.
- Trump, while aboard Air Force One, warned that he may send long-range Tomahawk missiles that could be used by Ukraine if Russia doesn’t settle the war soon. Trump added that the missiles would act as a new step of aggression if introduced in the Russia-Ukraine war. Russia has cautioned against Ukraine being provided with Tomahawk missiles. This keeps geopolitical risks in play and turns out to be another factor driving flows towards the safe-haven precious metal.
- According to the CME FedWatch tool, the possibility of a 25-basis-point interest rate cut by the Fed in October and December stands at around 96% and 87%, respectively. This, in turn, backs the case for a further appreciating move for the non-yielding yellow metal amid the lack of any US Dollar buying interest and relatively thin liquidity on the back of a bank holiday in the US.
Gold could consolidate before the next leg up; bullish potential remains intact
Friday’s bounce from the vicinity of a three-week-old ascending trend line support and the subsequent move up favor the XAU/USD bulls. However, still overbought conditions on short-term charts make it prudent to wait for some near-term consolidation or a modest pullback before positioning for any further gains.
Meanwhile, any corrective slide below the $4,020-4,018 area is more likely to attract fresh buyers near the $4,000 psychological mark. This should help limit the downside for the Gold price near the aforementioned trend line support, currently pegged near the $3,965-3,964 area. A convincing break below the latter, however, might prompt some technical selling and pave the way for a fall towards the $3,900 round figure.
US Dollar Price Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.10% | 0.13% | 0.17% | 0.05% | -0.07% | 0.16% | 0.10% | |
| EUR | -0.10% | 0.03% | 0.11% | -0.06% | -0.09% | 0.07% | -0.02% | |
| GBP | -0.13% | -0.03% | 0.12% | -0.09% | -0.14% | 0.03% | -0.07% | |
| JPY | -0.17% | -0.11% | -0.12% | -0.18% | -0.29% | 0.03% | -0.13% | |
| CAD | -0.05% | 0.06% | 0.09% | 0.18% | -0.16% | 0.13% | 0.02% | |
| AUD | 0.07% | 0.09% | 0.14% | 0.29% | 0.16% | 0.17% | 0.07% | |
| NZD | -0.16% | -0.07% | -0.03% | -0.03% | -0.13% | -0.17% | -0.10% | |
| CHF | -0.10% | 0.02% | 0.07% | 0.13% | -0.02% | -0.07% | 0.10% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
