Usman Salis
● Market analyst Emily Weeks pointed out that gold (XAU/USD) kicked off the week trading sideways between $3,900 and $4,050 as investors weighed conflicting economic signals. The precious metal hovered around $4,006 after bouncing back from an earlier low of $3,962 during Asian hours.
● Two main factors are keeping gold in this tight range. First, while the Fed cut rates by 25 basis points recently, policymakers made it clear they're not planning more cuts anytime soon. That's given the dollar some strength and capped gold's upside for now. Second, China dropped its VAT on gold trading from 13% to 6% starting November 1, 2025. But here's the twist—Chinese investors weren't thrilled. ANZ Research noted they're actually "disappointed," worried it might actually slow down trading activity and investment interest.
● This matters because China is a massive gold buyer. Lower tax rates could mean less physical trading on the Shanghai Gold Exchange, which might mess with retail prices and near-term sentiment. That said, long-term demand from institutions and ongoing geopolitical tensions are still keeping gold's overall outlook positive.
● Meanwhile, the U.S. government shutdown just hit day 33, delaying economic data and raising fiscal concerns. Traders are waiting for key reports this week: ISM Manufacturing PMI (expected to tick up to 49.5 from 49.1), ADP jobs data, ISM Services PMI, and the University of Michigan sentiment numbers—all of which could shift expectations about what the Fed does next.
Usman Salis
