NEW YORK: Gold prices rose by over 1percent 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 1.6percent at USD4,318.50 per ounce, as of 1330 GMT. US gold futures for December delivery climbed 2.8percent to USD4,333.10 per ounce. Gold prices notched a record high of USD4,378.69 on Friday, but closed 1.8percent 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 USD4,500/oz soon,” he added.
The US government shutdown stretched to its 20th day on Monday, after senators failed for the 10th 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 99percent 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 on Friday said a planned meeting with Chinese President Xi Jinping would go ahead. “I would not be surprised to see gold get to USD5,000/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 1.3percent to USD52.53.
The metal fell 4.4percent on Friday, after hitting a record high of USD54.47 earlier that day. Elsewhere, platinum rose 1.3percent on Monday to USD1,630.24 per ounce and palladium gained 0.4percent to USD1,479.51 per ounce.
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