HSBC-Precious Metals Daily Gold surges on China buying；may dip on risk sentiment-20251110

Market focus, emerging trends

Gold prices surged in Asian and London trading. The genesis of the rally was in China, as prices jumped as soon as that market opened. Sunday news reports of a possible end to the US government shutdown had no impact on China-based bulls.The China Onshore/Offshore spread moved up, reaching a premium of USD8/oz.Silver also jumped but ran into resistance at USD50/oz. NY-based Comex vaults registered further outflows of 1.35moz to London, which is raising liquidity in the spot markets but did not slow the rally. The PGMs rallied also but at a less robust pace.

The gold rally was reinforced once the US opened. Gold continued to climb, ignoring the bearish implications of a possible end to the US government shutdown. The market continued to look at weak US data from last week and a drop in US consumer sentiment. This reinforced expectations of a Fed rate cut at the next FOMC. The “risk on” mood may have weighed on the USD, which helped to buoy gold. Over the weekend, Treasury Secretary Scott Bessent warned the economic impact of the shutdown was worsening, which may also have supported gold. Bullion remained well-bid, shrugging off potentially bearish factors such as further progress towards ending the shutdown and slight increases in yields. Silver soared with gold. The vigorous move higher did not seem to have any other reasons than a likely Fed rate cut and the power of the gold rally. The PGMs also surged but at a lag to both gold and silver and without notable physical buying.