Gold prices escalated early on Saturday, drawing fresh investor interest as the U. S. Federal Reserve’s quarter-point rate reduction to the 3.75 %-4.00 % range reinforced the appeal of non-yielding assets. Spot gold edged up 0.3 % to US$4,034 an ounce, and bullion is positioned to record a third consecutive monthly gain driven by both bargain buying and institutional demand.
The backdrop includes a sharp rise in quarterly demand to 1,313 tonnes, the highest level in the historical series for the third quarter, according to data from the World Gold Council. Gold’s performance comes amid a complex interplay of monetary-policy shifts, trade-deal optimism and currency-market dynamics.
The latest policy action by the Fed significantly reduces the real yield on government debt, thereby enhancing the attraction of gold, which yields no interest. Analysts note that while the immediate trajectory remains upward, the bullish momentum faces headwinds from a robust U. S. dollar and evolving global trade tensions. “The fact that a December cut is now in question will blunt the precious-metals bounce,” commented metals trader Tai Wong, reflecting a shift in expectations after more hawkish remarks from Fed Chair Jerome Powell.
Adding to the supporting narrative is the tentative trade accord between the U. S. and China, which initially boosted sentiment but may reduce gold’s safe-haven draw if firmed. The agreement includes plans to ease tariffs and boost soybean purchases by China, signalling potential easing of geopolitical risk. At the same time, the dollar index remains at a multi-month high, which acts as a counter-force by increasing gold’s relative cost for holders of other currencies.
Central-bank purchases have emerged as a significant tailwind as well. The World Gold Council reports the third-quarter increase in demand was driven by investment demand, including both physical bullion and exchange-traded fund inflows. Meanwhile, the holdings of the SPDR Gold Trust ETF rose to 1,040.35 tonnes from 1,036.05 tonnes in the prior session, according to recent disclosures.
While the bullish themes are well established, caution is emerging. Markets now assign roughly a 74.8 % probability of an additional Fed cut in December—down from above 90 % just a week earlier. The downward revision in expectations reflects Chair Powell’s comments suggesting that further easing may not be imminent, undermining one pillar of gold’s advance.
Analysts highlight that a sharp correction in trade-deal sentiment or a sustained rise in real yields could dampen momentum. One report notes that gold is “holding its make-or-break level of US$3,870” and could test the US$3,945-4,084 range depending on monetary signals and data flows. On the other hand, major institutions continue to project strong medium-term upside: for example, one investment bank raised its gold target to US$3,800 by end-2025 and US$3,900 by mid-2026, citing rate cuts and a weakening dollar.
Regional physical-market behaviour adds further texture. In Asia, particularly China and Singapore, lower bullion prices have spurred retail buying even as premiums to international spot remain wide. In India, however, demand has softened as buyers awaited further price moves ahead of the festive season.
The predicament for investors is balancing gold’s safe-haven attributes with short-term risks from policy shifts and trade developments. The metal’s dramatic rally this year—rising by about 50 % according to some estimates—has led to concerns about overextension and “gold fatigue,” where investors begin to favour alternatives like platinum. Despite that, in a climate of geopolitical friction, uncertain inflation and shifting currency dynamics, gold continues to command attention.