By Terence Hove

Gold stabilized after posting gains on Monday. The market reacted to the expected developments in China’s economic policy. The Chinese Politburo’s announcement of a more accommodative policy has fueled a more positive sentiment among investors and could support risk-taking, which could weigh on gold to a certain extent. However, China’s central bank gold purchases restart could help in supporting the market after a volatile period.

Market attention now turns to upcoming U.S. inflation reports, which could be crucial in shaping the Federal Reserve’s monetary policy decisions. This follows last week’s stronger-than-expected employment data, which has increased the probability of a Federal Reserve rate cut at the next meeting. Meanwhile, the European Central Bank is anticipated to implement a quarter-point rate reduction at its Thursday policy meeting, potentially further supporting gold prices.

Gold’s appeal could also continue to strengthen amid geopolitical tensions in the Middle East and Europe. Coupled with growing concerns over U.S. trade tariffs and potential international trade conflicts, these factors could contribute to increased demand for the safe-haven asset.

Hove is Financial Markets Strategy Consultant to Exness