Gold prices rose in European trading on Tuesday, extending gains for the third consecutive session and continuing to break record highs, coming close to trading above $4,200 per ounce for the first time ever.

The rally was supported by strong safe-haven demand amid renewed trade tensions between the United States and China, as well as growing expectations of further interest rate cuts by the Federal Reserve.

To reassess these expectations, global financial markets are awaiting remarks from Fed Chair Jerome Powell later today on the economic outlook and monetary policy.

Price Overview

• Gold prices today: Gold rose by 1.7% to $4,179.14 per ounce from the opening level of $4,110.14, after hitting an intraday low of $4,090.74.

• On Monday, gold gained 2.2% — its second straight daily increase — after surpassing the $4,100 mark for the first time in history.

Trade Tensions

US President Donald Trump threatened on Friday to impose 100% tariffs on Chinese imports to the United States, while also announcing new export restrictions on advanced software, set to take effect on November 1. The move came in response to Beijing’s new limits on rare-earth and industrial equipment exports.

China defended its export curbs as justified measures to protect national interests but has so far refrained from retaliatory tariffs, signaling a desire to avoid a new escalation in the trade war between the world’s two largest economies.

US Treasury Secretary Scott Bessent said on Monday that President Trump remains on track to meet Chinese leader Xi Jinping in South Korea later in October.

US Interest Rates

• Philadelphia Fed President Anna Paulson said rising risks to the labor market strengthen the case for further rate cuts by the Federal Reserve.

• According to the CME FedWatch tool, markets are pricing in a 97% chance of a 25-basis-point rate cut at the October meeting, with only a 3% probability of no change.

Jerome Powell

Fed Chair Jerome Powell is scheduled to participate in a moderated discussion on the economic outlook and monetary policy during the annual meeting of the National Association for Business Economics in Philadelphia, where audience questions are expected.

Gold Outlook

• Kelvin Wong, Market Analyst for Asia-Pacific at OANDA, said: “Trade tensions are not the main driver today. Growing bets on continued Fed rate cuts, lower long-term borrowing costs, and a reduced opportunity cost are all supporting gold.”

• Analysts at Bank of America and Société Générale now expect gold to reach $5,000 per ounce by 2026, while Standard Chartered raised its average 2026 forecast to $4,488.

SPDR Holdings

Holdings in the SPDR Gold Trust — the world’s largest gold-backed exchange-traded fund — rose by 1.72 metric tons on Monday, marking a second consecutive daily increase and bringing total holdings to 1,018.88 metric tons, the highest level in nearly two weeks.

The British pound rose in European trading on Tuesday against a basket of global currencies, resuming its recovery from a two-month low against the US dollar, supported by a pause in the dollar’s rally ahead of key remarks from Federal Reserve Chair Jerome Powell.

Expectations are leaning toward a 25-basis-point rate cut by the Bank of England at its November meeting. To reassess these odds, investors are awaiting the release of key UK labor market data later today.

Price Overview

• GBP/USD: The pound rose by 0.15% to 1.3352 from the opening level of 1.3333, after touching an intraday low of 1.3326.

• On Monday, the pound lost 0.2% against the dollar, following a 0.4% rise on Friday as part of a rebound from a two-month low of 1.3262.

US Dollar

The US dollar index fell by more than 0.15% on Tuesday, pulling back again from its two-month high, reflecting a pause in the greenback’s advance against major and minor currencies.

This decline came as investors weighed the latest trade tensions between the United States and China, which, if they intensify, could reignite a trade war between the world’s two largest economies.

Federal Reserve Chair Jerome Powell is scheduled to participate in a moderated discussion on the economic outlook and monetary policy at the annual meeting of the National Association for Business Economics in Philadelphia, where audience questions are expected.

UK Interest Rates

• Following the Bank of England’s most recent meeting, traders increased bets on further monetary easing, expecting at least one additional 25-basis-point cut this year.

• Futures markets currently price a roughly 60% probability of a 25-basis-point cut at the November policy meeting.

UK Labor Market

To reassess these expectations, investors are awaiting the release of key UK labor market indicators later today, including September jobless claims, the unemployment rate, and average earnings for August.

Pound Outlook

Here at Economies.com, we expect that if the upcoming UK labor market data turn out softer than market expectations, the likelihood of a Bank of England rate cut in November will increase — likely placing downward pressure on the pound.

The New Zealand dollar fell in Asian trading on Tuesday against a basket of major and minor currencies, resuming losses that had paused the previous day against the US dollar, and hitting its lowest level in six months due to renewed trade tensions between the United States and China — New Zealand’s largest trading partner.

Amid these developments, investors are betting on additional monetary stimulus in New Zealand to support demand and shield the economy from rising global headwinds. As a result, expectations for another rate cut by the Reserve Bank of New Zealand (RBNZ) in November have strengthened considerably.

Price Overview

• NZD/USD: The New Zealand dollar fell by about 0.45% to 0.5704 — its lowest level since April — from the opening level of 0.5726, after reaching an intraday high of 0.5729.

• On Monday, the NZD ended 0.1% higher against the US dollar, snapping a four-day losing streak in what appeared to be a brief corrective pause.

Trade Tensions

US President Donald Trump said on Friday that the United States would raise tariffs on imports to 100% starting November 1 unless China lifts its new export restrictions on key rare-earth materials.

For its part, Beijing defended those restrictions as legitimate measures to protect national interests, though it has so far avoided direct retaliation through counter-tariffs on US goods — signaling a desire to avoid further escalation in the ongoing trade war between the world’s two largest economies.

New Zealand Interest Rates

• The Reserve Bank of New Zealand (RBNZ) last week cut its benchmark interest rate by 50 basis points to a range of 2.50%, the lowest since July 2022, exceeding market expectations for a 25-basis-point cut. This marked the eighth rate reduction since the current monetary-easing cycle began a year ago.

• The RBNZ said its Monetary Policy Committee remains open to further cuts in the official cash rate as needed to ensure inflation stabilizes sustainably near the 2% midpoint target over the medium term.

• Futures pricing currently assigns more than a 95% probability of another 25-basis-point cut at the November 26 meeting.

• Forward-rate markets indicate expectations for the benchmark rate to reach around 2.0% by year-end.

• Investors will closely watch upcoming key New Zealand data on inflation, unemployment, and GDP growth to reassess the outlook for monetary policy.

OPEC+ yesterday approved a fresh increase in production, albeit a limited one of 137,000 barrels per day. And although oil prices rose slightly after the announcement, they still remain in a narrow trading range, with Brent crude hovering just above $65 per barrel.

This development carries a two-edged implication. On one side, it is good news for energy-consuming nations — including the United States. On the other, it is bad news for oil producers — including, paradoxically, the US itself.

The Wall Street Journal reported that Saudi Arabia’s strategy to lead the rollback of production cuts amounts to a “gift to Trump,” because it helps keep gasoline prices down at the pump and mitigates the economic impact of tariffs. Moreover, it cuts into Russian energy export revenues, making it easier for Trump to broker a peace deal in Ukraine, according to the newspaper’s analysis.

In some respects, Saudi Arabia’s shift to increased production is beneficial to the US, particularly in terms of retail fuel pricing. The national average gallon price stood at $3.133 on Sunday (according to AAA), slightly below last year’s $3.176. But that average is a broad indicator — states with higher local taxes, like California, always command higher pump prices regardless of OPEC+ policy.

However, low oil prices also raise anxiety for the US shale industry — a sector that may or may not have been a target in Saudi Arabia’s decision to unwind cuts agreed in 2022. Many media reports suggest OPEC+ is looking to reclaim market share from the US, Guyana, and Brazil.

But the rivalry is not merely about barrels. For instance, US oil exports to China dropped by about 50% last year, even before Trump’s tariff measures intensified. That forced much of US output to redirect toward Europe.

At the same time, Guyana exports oil mainly to Europe, making it a direct competitor to the US — though its output is only about 700,000 barrels per day, far short of competing with Washington or Riyadh. Meanwhile, Brazil has been expanding its oil exports significantly, with a large portion going to China.

Herein lies the real battlefield: China and the broader Asia region, where demand is growing faster than anywhere else. Many analysts expect this growth trajectory to continue long after demand peaks elsewhere. That said, European demand also continues to grow — many European nations still import Russian oil despite announced plans to phase out Moscow’s energy over coming months.

Despite Wall Street Journal’s hypothesis that Saudi Arabia is currying favor with Trump, Riyadh’s behavior since the Biden administration struggled to maintain close ties suggests different priorities — chiefly securing funding for “Vision 2030” projects in the face of persistently low oil prices that, OPEC argues, don’t reflect true demand trends.

As for Trump, he faces a double bind: he needs to placate the US oil sector, which is angered by tariffs and low prices, while also maintaining low fuel prices for consumers. Those goals conflict — he cannot achieve “American energy dominance” if drilling becomes uneconomical due to depressed prices.

Although much of the energy media focuses on the Trump-angle in OPEC+ policy, the Organization is acting with confidence — believing that talk of a global oil demand collapse is exaggerated.

Some OPEC+ members have not yet fully ramped up production to agreed levels, which has helped stabilize prices. Moreover, the return to output increases aims also at regaining lost market share, not purely serving other nations’ energy agendas.

In reality, what benefits a major producer tends to benefit all producers: ideal pricing that neither weakens demand nor overheats markets into collapse. As one analyst put it, OPEC+ has avoided flooding the market with oil as in the past — those days of deliberate oversupply are behind us.