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

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

Spot gold was up 2.1 percent at $4,336.94 per ounce, as of 11:04 a.m. ET (1504 GMT). U.S. gold futures for December delivery climbed 3.3 percent to $4,354 per ounce.

Gold prices notched a record high of $4,378.69 on Friday, but closed 1.8 percent lower – their steepest drop since mid-May – after comments from U.S. President Donald Trump alleviated some concerns around U.S.-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 $4,500/oz soon,” he added.

The U.S. 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.

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

Meanwhile, traders are pricing in a 96 percent 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 U.S.-China trade talks, after Trump on Friday said a planned meeting with Chinese President Xi Jinping would go ahead.

“I would not be surprised to see gold get to $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 1.1 percent to $52.40. The metal fell 4.4 percent on Friday, after hitting a record high of $54.47 earlier that day.

Elsewhere, platinum rose 1.1 percent on Monday to $1,627.86 per ounce and palladium gained 1.2 percent to $1,490.03 per ounce.