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Gold consolidates following record rally, US-China discussions in focus

Gold consolidates following record rally, US-China discussions in focus

Gold prices edged higher on Monday, after a record rally. Investors awaited clues from the upcoming U.S. China trade talks.

As of 1139 GMT, spot gold rose 0.3% to $4,2562.84 an ounce. U.S. Gold Futures for December Delivery climbed 1.6%, to $4280.40 an ounce.

Silver spot rose by 0.3%, to $51.98, after a 4.4% drop on Friday. It had hit a record high at $54.47 the day before.

Ole Hansen is the head of commodity strategy for Saxo Bank. He said that gold was still very bullish.

TRUMP'S 100% CHINA THREAT AND EXPECTED FEDER RATE CUT

Hansen said that the U.S. shutdown of government is still adding some support, while the U.S. China meeting scheduled for next week will be a focus.

Donald Trump, the U.S. president, said Friday that his proposal of a 100% tariff on Chinese goods would not be sustainable. He also added that he will meet with Chinese President Xi Jinping within two weeks.

Gold, which hit record highs multiple times this year, most recently Friday at $4,378.69, gained more momentum last week when the U.S. announced steep tariff increases over China's controls on rare-earths exports. It fell by more than 1.8% after Trump's remarks.

The U.S. CPI, which has been delayed because of the government shutdown in the U.S., will be released Friday, just days before the Fed policy meeting on October 28-29. Core inflation is expected to have remained at 3.1% for September.

It is widely believed that the U.S. Federal Reserve will cut interest rates again by a quarter of a percentage point.

In the third quarter, China's economy grew at its slowest pace in over a year.

Hansen stated that "the weakness in the Chinese real estate market is a major source of support for gold."

Palladium fell nearly 2%, to $1445.24 an ounce, and platinum dropped 0.8%, to $1596.95 an ounce.

(source: Reuters)