June gold futures - the most traded type - increased by 2.89% (equivalent to 94.2 USD), to 3,341.3 USD/ounce, after falling to a daily low of 3,243.5 USD/ounce and approaching the highest level of 3,346.7 USD/ounce. This increase not only compensates for the 2.49% decrease from last week but also surpasses it.
Although this price increase session took place in a low liquidity condition (only about 182,130 contracts), it attracted the attention of analysts.
Some predict gold could re- set a record gains for the week - reaching 6.51% (equivalent to $88.8 million) in early April, when trading volume reached 1.31 million contracts.
The USD index has fallen slightly by 0.27% to 99.6, contributing slightly to gold's rally (accounting for about 10%), but the main factor is still investors' growing concerns about economic prospects.
President Donald Trump's recent statement on the proposal to impose a 100% tax on imported films raises concerns about the risk of escalating global trade tensions. This makes many people seek gold as a safe haven asset.
The market is becoming cautious ahead of the US Federal Reserve's decision on Wednesday. According to CME's FedWatch tool, there is a 95.6% chance that the Fed will keep the benchmark interest rate unchanged in the range of 4.25%-4.50%, and only 4.4% chance of a cut as expected.
The Fed is currently under pressure from Donald Trump to cut interest rates, while new tax policies risk pushing up inflation, creating a difficult position in policy management.
In a recent report, Saxo Bank said: Gold prices are being supported around $3,200/ounce before the Fed announces its policy. Despite a nearly 25% increase this year, gold has recently shown signs of losing momentum as large hedge funds have reduced their net buying position to a 1-year low.
The non-farm payrolls report released last weekend continues to show the strength of the US labor market, increasing the possibility of the Fed keeping the current interest rate unchanged at this meeting.
The developments of gold prices in the rest of the week will reflect market sentiment towards inflation expectations, interest rate orientation and general economic stability.
