Gold spot prices surpass $4,300, intensifying safe-haven asset preference amid Fed easing signals

Most Notable USD/XAU Financial Asset

On Monday morning in Asia, gold traded around $4,315 per ounce, continuing its upward momentum. Especially after surpassing the $4,300 threshold, the bullish trend has persisted, driven by renewed speculation about the Federal Reserve(‘s potential interest rate cuts next year, capturing investors’ attention.

) Increased Uncertainty Resurges Safe-Haven Asset Preference

The shooting incident### at Bondi Beach in Sydney, Australia, which resulted in at least 16 deaths and 40 injuries(, highlighted global uncertainties once again. Australian Prime Minister Anthony Albanese described it as a “targeted attack” against a specific community, and such geopolitical risks naturally triggered a flight to safe assets. Among dollar-denominated assets, gold continues to benefit from its traditional role as a risk-averse instrument, experiencing a surge in demand.

) Fed Rate Cuts Reduce Gold Holding Costs

The Fed announced its third and final rate cut of the year last week. The decision to lower the benchmark rate by 25bp###0.25%( to a target range of 3.50%–3.75% is structurally positive for the gold market. When interest rates fall, the opportunity cost of holding gold, which does not generate interest income, decreases. The market is reflecting the possibility of additional cuts next year, supporting gold prices from high levels.

) Diverging Signals from Fed Officials Increase Dollar Reactivity

Within the Fed, there are differing views on monetary policy. Chicago Fed President Charles Evans noted, “If we had waited for more data on key indicators delayed by the government shutdown, we might have been more cautious before the next cut.” Conversely, Cleveland Fed President Loretta Mester maintained that “interest rates need to stay sufficiently high to contain inflation.”

Speeches scheduled this week by Fed Board Member Stephen Miran and New York Fed President John Williams are key variables. If their comments adopt a hawkish tone contrary to expectations, immediate downward pressure could be exerted on gold, a dollar-denominated asset.

Tuesday NFP Release, Short-Term Directional Indicator

The delayed October non-farm payrolls (NFP) report### will be released this Tuesday. Market participants are watching this data as the “next signal” to determine short-term trends in gold prices, and if signs of weak employment emerge, expectations for rate cuts could be reignited.