Gold prices edged higher to near $4,215 during early Asian trading on Monday, supported by rising demand for gold-backed exchange-traded funds (ETFs) and a weaker US Dollar. Inflows into gold ETFs hit a four-year high, according to Bloomberg data, while the People’s Bank of China added 740,000 ounces to its reserves in September, extending its buying streak to 23 consecutive months.
Geopolitical tensions in the Middle East also contributed to gold’s appeal as a safe-haven asset. The Saudi-led coalition reported an attack on a passenger terminal at King Khalid International Airport in Riyadh, which the Houthis claimed as a response to “Saudi aggression.” Traders are closely monitoring these developments.
This week, the focus shifts to key US inflation data, including the Consumer Price Index (CPI) on Wednesday and the Producer Price Index (PPI) and Retail Sales on Thursday. Hotter-than-expected inflation could reinforce expectations of further Federal Reserve rate hikes, potentially boosting the US Dollar and weighing on gold prices. Currently, traders see a 17.7% chance of an October rate hike and an 84.1% likelihood of a December increase.
TD Securities noted that trend-following funds are covering short positions in gold, citing strong fundamentals such as geopolitical risks, fiscal concerns, and de-dollarization trends. The firm suggests gold could begin a new bull run into 2027. Meanwhile, Fed official Musalem emphasized the need for additional policy tightening to curb inflation, reinforcing a hawkish stance.
Technically, gold remains capped below its 100-day simple moving average, with resistance at $4,225 and support near $4,055. The 14-day Relative Strength Index (RSI) sits at 47.08, indicating fading upside momentum.