Crypto Wipeout Shakes Global Markets; Gold Hits Record High

The EUR/USD pair remains steady above 1.1600, trading near 1.1620 during Monday’s Asian session, after posting nearly 0.5% gains in the previous session, as the US Dollar weakens amid renewed US-China trade tensions and an ongoing US government shutdown.

Market sentiment soured after US President Donald Trump announced plans to impose 100% tariffs on Chinese imports, escalating concerns over the trade conflict between the world’s two largest economies. Trump also stated that he sees “no reason” to meet China’s President Xi Jinping during the upcoming South Korea summit in two weeks. In response, Beijing warned it would retaliate if the tariff threats materialize, heightening fears of economic repercussions for the US.

Meanwhile, the US government shutdown has started to disrupt public sector operations, with the first federal paychecks for October delayed. The closure is expected to persist at least until Tuesday, as the Columbus Day holiday on Monday prevents further progress toward a resolution.

On the European side, the Euro finds support from easing political tensions in France. President Emmanuel Macron is preparing to appoint a new prime minister following Sébastien Lecornu’s resignation. Market confidence improved after Lecornu signaled that parliament dissolution and snap elections were unlikely, reducing political uncertainty.

Additionally, the European Central Bank’s (ECB) September meeting minutes revealed policymakers’ consensus that the current monetary policy stance aligns with the 2% medium-term inflation target. Officials agreed that existing interest rates remain adequate to counter potential shocks, balancing two-sided inflation risks.

Gold prices soared to record levels on Monday, buoyed by safe-haven demand amid escalating US-China trade tensions and growing expectations of Federal Reserve interest rate cuts. Silver also surged to an all-time high, supported by strong investment flows and tight market conditions.

Renewed risk aversion stemmed from President Trump’s plan to impose 100% tariffs on Chinese imports and introduce new export controls on critical software starting November 1, in response to China’s restrictions on rare earth exports, which Beijing defended but did not counter with new tariffs.

Non-yielding bullion has gained 53% year-to-date, driven by geopolitical risks, robust central bank purchases, ETF inflows, and expectations of Federal Reserve rate cuts, alongside broader economic uncertainty linked to trade policy.

Markets are now pricing in a near-certain 25-basis-point rate cut in October, followed by another in December, according to FedWatch data. Fed Chair Jerome Powell is scheduled to speak at the NABE annual meeting on Tuesday, with investors watching closely for new policy signals. Several other Federal Reserve officials will also deliver remarks this week.

On the geopolitical front, world leaders, including President Trump, are meeting in Egypt on Monday to discuss ceasefire plans for Gaza.

Oil prices climbed early on Monday, recovering from five-month lows in the previous session, as investors grew optimistic that potential talks between US President Donald Trump and China’s President Xi Jinping could help ease trade tensions between the world’s two largest economies and biggest oil consumers.

The developments come ahead of a potential Trump–Xi meeting on the sidelines of the Asia-Pacific Economic Cooperation (APEC) summit in South Korea, which US Trade Representative Jamison Greer said could still take place later this month.

Oil prices previously slumped in March and April at the height of the last round of US-China trade tensions.

Meanwhile, China’s crude imports in September rose 3.9% year-on-year to 11.5 million barrels per day, according to customs data, as refineries operated at their highest utilization rates of the year and continued to stockpile inventories.

In the Middle East, President Trump announced on Sunday that the Gaza war has ended, ahead of his visit to Israel, where the release of Israeli hostages and Palestinian prisoners is expected under a fragile ceasefire deal he helped broker.

U.S. stocks tumbled on Friday, with the us 500 posting its biggest one-day drop since April, after President Donald Trump threatened a “massive increase” in tariffs on Chinese imports, reigniting fears of a renewed U.S.-China trade war. The sharp decline underscored growing investor anxiety over the global economic fallout such measures could trigger, particularly for export-driven sectors and technology firms with significant exposure to China. Safe-haven assets such as gold and U.S. Treasuries saw increased demand as risk sentiment deteriorated.

The sell-off came after Trump said his administration was considering retaliatory measures against China, including a substantial hike in tariffs on Chinese goods, in response to Beijing’s decision to restrict rare earth exports to the United States. The move raised concerns about potential disruptions to global supply chains for critical materials used in electronics, defense, and electric vehicles.

Elsewhere, a University of Michigan survey showed U.S. consumer sentiment remained largely unchanged in October, with the index registering 55.0, slightly above expectations of 54.1, and close to September’s 55.1 reading. One-year inflation expectations eased slightly but remained elevated. However, with the ongoing government shutdown delaying key data releases — including crucial inflation figures — economists warned that the lack of up-to-date economic indicators could complicate the Federal Reserve’s policy outlook, making it harder to gauge whether additional interest rate cuts will be needed later this year.