Insights 
VT 
China’s Gold Buying Pause
The People’s Bank of China has paused its gold buying, with September’s exports to China down 17.6% month-on-month. There is a 96% likelihood that the Federal Reserve will lower rates at their late October meeting, which might drive gold prices upwards.
Despite the decline in gold prices, the US Dollar Index has dropped by 0.07% to 98.84, and Treasury yields are down. A rally in global equity markets has occurred following trade discussions between the US and China.
JPMorgan predicts that by late 2026, gold prices could average $5,055 per ounce. The sustained demand from investors and robust central bank purchases are expected to drive this increase.
We are seeing gold react to a classic tug-of-war between geopolitics and monetary policy. The price dip below the key $4,000 level is driven by hopes for a US-China trade deal, which reduces the metal’s appeal as a safe haven. However, this is happening just as the Federal Reserve is almost certain to cut interest rates this week.
Fed’s Impact on Gold Prices
The Fed’s decision on October 29 will be the most immediate catalyst for gold prices. With a 96% probability of a rate cut already priced in, the market’s focus will be on the forward guidance for future policy. We remember how gold began its significant rally in 2024 after the Fed clearly signaled an easing cycle, so a similarly dovish tone could easily reverse the current downward pressure.
This week’s meeting between the US and Chinese presidents presents a major binary risk for the market. A definitive trade agreement could send gold tumbling towards the 50-day moving average near $3,767 as risk appetite soars. Conversely, any sign of the talks faltering would likely reignite safe-haven buying and push prices back toward the recent highs above $4,100.
For traders who believe the trade deal’s positive sentiment will overpower the Fed’s rate cut, buying put options with strike prices below $3,950 seems prudent. This strategy would profit from a continued slide toward the October lows around $3,900. The pause in gold buying by the People’s Bank of China adds weight to this bearish short-term outlook.
