In the overnight trading session, precious metal prices rose sharply, continuing their momentum into the morning. As of the latest update, the main COMEX gold futures contract approached $4,400 per ounce, while the main futures contract for Shanghai gold broke the 1,000 yuan mark, and contracts for later months have also risen above this level. So, what are the main drivers in the short term? With gold prices consistently hitting new highs, what risks should we be aware of? Let's discuss.

Firstly, the recent escalation of trade tensions has led to evolving situations this week, creating a volatile market sentiment fraught with uncertainty, which has fueled increasing risk aversion, drawing significant capital into gold as a safe haven.

Secondly, the ongoing U.S. government shutdown has halted the scheduled release of economic data. Officials have warned that this could impose significant damage to the U.S. economy, thus providing some support for precious metal prices.

Additionally, Federal Reserve Chairman Jerome Powell recently indicated signs of further distress in the U.S. labor market and suggested that the Fed might soon conclude its balance sheet reduction. Other Fed officials have also expressed dovish sentiments, with strong expectations for two rate cuts before the year ends. Attention should be paid to the upcoming Federal Reserve meeting at the end of October.

Overall, under the support of multiple macro factors, gold prices are continuing their upward trend; however, caution is warranted regarding the risks of chasing prices higher in the short term. On one hand, with Shanghai gold surpassing the 1,000 yuan mark, the market may experience profit-taking. In the short term, investors should monitor funding flow conditions. On the other hand, there are signs of easing in geopolitical tensions, with forthcoming attention on the second stage of ceasefire negotiations in Gaza and the U.S.-Russia meeting in Budapest. From a medium to long-term perspective, the logic of "de-dollarization" and combating long-term inflation remains unchanged, suggesting continued upward potential for gold prices.