Gold prices (XAUUSD) extended their rally to around $4,040 during Monday’s early Asian session as rising trade tensions between the United States and China fueled demand for safe-haven assets. Investors are also waiting for clarity on when the U.S. government will reopen and release key economic data that could influence the next moves of the Federal Reserve.
The surge in gold was triggered by U.S. President Donald Trump’s announcement of a new 100% tariff on Chinese imports, set to take effect on November 1. Beijing quickly warned that it would retaliate if Washington moves forward with the measure. “Reigniting the trade war will weaken the U.S. dollar and boost safe-haven demand,” said independent metals trader Tai Wong.
Meanwhile, market expectations for a Federal Reserve rate cut are growing stronger. According to the CME FedWatch tool, traders are pricing in a 97% chance of a 25-basis-point cut in October and a 92% chance of another cut in December. Lower interest rates typically reduce the opportunity cost of holding non-yielding assets like gold, further supporting its price.
Looking ahead, traders will closely watch Thursday’s U.S. Retail Sales and Producer Price Index (PPI) reports. Hotter-than-expected inflation data could strengthen the U.S. dollar and temporarily weigh on gold prices.