Gold prices experienced a rebound, interrupting a recent losing streak, largely due to significant buying activity from central banks. While geopolitical developments, such as a trade agreement between the US and China, and revised expectations regarding future interest rate cuts by the Federal Reserve had dampening effects, strong central bank demand exerted upward pressure on prices.
- Gold prices rose toward $3,990 per ounce, ending a four-day decline.
- Central bank gold purchases in Q3 totaled 220 tons, a 28% increase from Q2.
- Kazakhstan was the largest gold buyer among central banks.
- Brazil purchased gold for the first time in over four years.
- The US and China agreed to a trade truce, including an agreement on rare earths and critical minerals, and reduced fentanyl tariffs.
- The agreement included Beijing agreeing to curb fentanyl production and resume purchases of US soybeans.
- Federal Reserve Chair Jerome Powell signaled a lower likelihood of another interest rate cut in December.
- Market expectations for another rate cut this year decreased following Powell’s comments.
The interplay of factors has created a mixed outlook for the asset. Robust demand from central banks suggests a fundamental underlying strength and potential for future price increases. However, external factors, such as shifts in monetary policy and progress in trade negotiations between major economies, could exert downward pressure, indicating potential volatility.