Gold price upward trend continues: Safe asset demand increases amid Fed rate cut outlook

As the possibility of the Fed’s additional rate cuts is reflected in the asset markets, XAU/USD remains around $4,300. On Monday during Asian hours, spot gold traded near $4,315, continuing its upward momentum. In particular, the market has already priced in next year’s Federal Reserve monetary easing policies, supporting the ongoing rally in gold prices.

Easing bias driving gold prices

The Fed’s decision last week to implement its final rate cut(25bp), lowering the target range to 3.50%–3.75%, is acting as a positive signal for the gold market. When interest rates fall, the opportunity cost of holding non-yielding gold decreases, making it a relatively more attractive asset. Industry experts believe that such easing expectations are creating a structurally favorable environment for XAU/USD.

Geopolitical uncertainties intensify safe-haven demand

As risk-off sentiment strengthens, funds continue to flow into gold. The shooting incident(16 dead, 40 injured) at Bondi Beach in Sydney has heightened global market anxiety, directly stimulating demand for gold, a safe-haven asset.

Internal Fed disagreements create uncertainty about future direction

Diverging views within the Fed regarding interest rate outlooks are emerging. Chicago Fed President Goolsbee expressed caution, stating, “We should have reviewed more data before any further cuts,” amid delays in key economic indicators due to the government shutdown. Conversely, Cleveland Fed President Mester maintained a hawkish stance, emphasizing the need to keep interest rates sufficiently high to contain inflation.

Key economic indicators and Fed statements to watch

The October non-farm payrolls (NFP) report, scheduled for release this Tuesday, is considered a key variable in determining short-term market direction. Additionally, comments from Fed officials such as Governor Brainard and New York Fed President Williams are crucial for predicting future movements of the dollar and gold prices. If Fed officials reaffirm a hawkish stance, the US dollar is likely to rebound, which could lead to short-term weakness in dollar-denominated assets like gold.