Gold set a new record on Monday, rebounding from Friday’s drop, as uncertainty over US-China trade talks as well as expectations of a Federal Reserve rate cut fueled demand for the safe-haven metal.
Spot gold rose as much as 2.9% to $4,380.89 an ounce, surpassing its all-time high from last week before the selloff. US gold futures jumped over 4% to nearly $4,400 an ounce, also a new high.
Prices are now up more than 65% so far in 2025, underpinned by soaring demand for havens in the face of geopolitical and trade tensions, rising fiscal and debt levels, and threats to the Federal Reserve’s independence.
The Monday rally comes despite comments from US President Donald Trump that alleviated some concerns around its tensions with China, stating that they will have a “fair deal”, with the two sides slated to meet in the coming days.
Buying the dip
The developments would have dampened demand for havens such as gold, but traders instead took advantage of a selloff Friday to buy more bullion.
There’s nothing but buyers in the gold market, said Ole Hansen, commodities strategist at Saxo Bank AS. Friday’s retreat in prices “has already attracted fresh demand today, highlighting the strength of underlying demand still lurking below, waiting for an opportunity,” he added.
In a note to Bloomberg, TD Securities’ Dan Ghali ascribed the price rally to “extreme FOMO,” referring to the fear-of-missing-out sentiment among investors, adding gold’s ascent this time around is “overwhelmingly driven by the West.”
CPM Group managing partner Jeffrey Christian told Reuters that political and economic concerns are what’s driving prices higher after Friday’s sharp sell-off. “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 said.
Meanwhile, a widely anticipated US rate cut at the end of this month is also driving investors towards gold, as the metal tends to thrive in low-rate environments. In the lead-up to the Fed’s first rate cut in September, bullion soared to multiple records, registering nine straight weeks of gains in the process.
Traders are currently pricing in a 99% chance that the Fed will cut interest rates again next week, followed by another in December.
(With files from Bloomberg and Reuters)
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