• Gold price surges to around $4,130 in Tuesday’s early Asian session.
• Renewed US-China trade tensions and Fed rate cut expectations boost the Gold price.  
• Fed’s Powell speech will be closely watched later on Tuesday. 

Gold price (XAU/USD) jumps to a fresh record high near $4,130 during the early Asian session on Tuesday. The precious metal extends the rally as renewed US-China trade tensions send investors flocking to safe-haven assets. The Federal Reserve’s (Fed) Chair Jerome Powell is scheduled to speak later on Tuesday.

Escalating trade tensions between the US and China reignited fears of a trade war between the world’s two largest economies, boosting safe-haven assets like the Gold price. US President Donald Trump announced on Friday that he will impose new trade measures against Beijing, including 100% tariffs on all Chinese goods and export controls on critical US-developed software, due to take effect by 1 November. 

Nonetheless, Trump adopted a less strident stance on Sunday, saying that everything would be "fine" and that the US was not looking to "hurt" China.

Expectations mounted for further interest rate cuts by the US Fed, which contributes to Gold’s upside. Markets are currently pricing in an almost certain 25 basis points (bps) rate cut at the Fed’s October meeting, with another reduction expected in December, according to the CME FedWatch tool. Lower interest rates could reduce the opportunity cost of holding Gold, supporting the non-yielding precious metal. 

Further consolidation or correction cannot be ruled out in the near term, as the yellow metal has climbed over 56% year-to-date so far this year. “Given the carousel of drivers, and how short-lived dips have been, this rally has legs in our view, but a near-term correction would be healthier for a longer-term uptrend,” said Suki Cooper, global head, commodities research at Standard Chartered Bank.