Gold near record high: What's next?

Gold continues to trade near its record high, reaching around $4,330 per ounce on Tuesday, after hitting a new high yesterday near $4,381 per ounce.

This strong performance is driven by the precious metal's appeal as a safe haven in times of uncertainty, as well as growing expectations that the US Federal Reserve will cut interest rates next week.

Moving Catalysts

1- Interest Rate Cut Expectations:

Investors are paying close attention to the Fed's actions, as markets are still pricing in a 25 basis point rate cut at its meeting later this month, with another cut expected by December. Low interest rates are a catalyst for gold, as they reduce the cost of holding gold since it doesn't yield returns, increasing its investment appeal.

2- Political Uncertainty and Government Shutdown:

The partial US government shutdown continues to fuel uncertainty and shake investor confidence, boosting demand for safe-haven assets like gold. Although White House Economic Advisor Kevin Hassett stated that the shutdown crisis may be resolved this week, uncertainty remains.

3- Geopolitical Context and Upcoming Meetings:

Trade tensions between the United States and China add another layer of uncertainty.

In this context, US Treasury Secretary Scott Besant is expected to meet with Chinese Vice Premier Wen Jiabao in Malaysia this week, in preparation for the anticipated talks between Presidents Donald Trump and Xi Jinping.

Such meetings remain closely watched by investors, who are looking for clues about the future of economic relations between the two giants.

Next Focus: Inflation Data

Amid this scenario, investors are now focused on the September Consumer Price Index (CPI) report, which was previously scheduled to be released but was delayed due to the government shutdown. It is now scheduled for release next Friday.

This report will provide crucial insights into the health of the US economy and the direction of inflation, crucial data that will directly impact the Federal Reserve's interest rate decisions and, consequently, the path of gold.

The current outlook appears favorable for gold, as safe-haven appeal combines with more encouraging monetary policy expectations.

As long as these factors persist, the yellow metal is likely to maintain its strong momentum near record levels, with the potential for further gains if data and political developments are supportive.

Expectations indicate that any downward correction would be a good opportunity to buy from higher levels.

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