U.S. inflation data for September was weak, and rising expectations for rate cuts boosted demand for precious metals. Markets see the probability of another Fed rate cut at the October 29–30 meeting as close to 99%, with further easing expected in December.

According to the latest figures from the U.S. Bureau of Labor Statistics, the Consumer Price Index (CPI) rose 0.3% month-on-month in September, below the 0.4% forecast and also lower than August’s 0.4%. On an annual basis, headline inflation rose 3.0%, below the 3.1% expected and slightly above August’s 2.9%. Lower borrowing costs typically enhance the appeal of non–interest-bearing assets like gold because they reduce the opportunity cost of holding gold.

In addition, as the U.S.–China trade standoff begins to ease, market sentiment has improved. Earlier this month, after China decided to expand export restrictions on rare earth materials, U.S.–China trade headlines dominated the market. In response, President Trump threatened to impose 100% tariffs on Chinese imports starting November 1, triggering tit-for-tat measures, including shipping and port fees on both sides.

The White House confirmed that U.S. President Donald Trump will meet Chinese President Xi Jinping on the sidelines of the APEC summit in South Korea on October 30, a development that helps ease recent trade tensions.

Despite recent volatility, the fundamental backdrop for gold remains favorable. The prolonged U.S. government shutdown and ongoing geopolitical and economic uncertainty continue to drive demand for safe-haven assets such as gold.

S&P Global’s Composite PMI for October rose to 54.8 from 53.9 in September, marking the fastest private-sector expansion in three months. The Services PMI jumped from 54.2 to 55.2, while the Manufacturing PMI ticked up from 52.0 to 52.2.

A University of Michigan survey shows consumer sentiment weakening in October, with the overall index falling to 53.6 from 55.1 in September, and the consumer expectations index down to 50.3 from 51.7. Meanwhile, inflation expectations were mixed: the 1-year outlook held at 4.6%, while the 5-year outlook edged up from 3.7% to 3.9%.

Market analysis:

Gold is choppy and hovering on the 4-hour chart, with MACD lines and histogram expanding below the zero line. Investors expect the Fed is almost certain to cut rates at this week’s meeting and again in December. Rate cuts will reduce the opportunity cost of holding gold. Driven by geopolitical and trade tensions, strong central-bank buying, and expectations of U.S. rate cuts, gold prices have risen a cumulative 55% so far this year.