By Van Ha Trinh, Financial Markets Strategist at Exness
Gold surged on Monday, reaching its highest level in three weeks as renewed expectations of a Federal Reserve rate cut and persistent geopolitical tensions lifted safe-haven demand. Weak US data on consumer sentiment and employment reinforced views that monetary easing could continue in December. The University of Michigan’s sentiment index declined, while October job losses pointed to growing economic risks.
Traders now assign about a 65% probability to another rate cut, as markets brace for a series of speeches from Fed officials this week that could provide further clarity on the policy path. While cautious remarks could benefit US treasury yields, a soft tone could boost gold’s prices.
Geopolitical uncertainty added to the bullish tone, with renewed hostilities in the Middle East and Eastern Europe supporting gold’s appeal as a safe-haven asset.
However, optimism that US lawmakers may soon resolve the government shutdown could temper some of the metal’s gains, easing broader risk aversion. ETF data also reflected cooling investor appetite as global gold holdings fell by 22 tons in the week ending October 31, marking a second consecutive week of outflows. Europe saw withdrawals of nearly 15 tons, while Asia was the only region to record inflows, adding just 0.9 tons.