Gold prices dropped below $3,200 an ounce on Wednesday, as easing U.S.-China trade tensions continued to erode investor appetite for the safe-haven asset.
Spot gold slid 2% to $3,183.76 per ounce by 10:30 a.m. ET, while three-month gold futures retreated 1.7% to $3,194.00 on the New York exchange. The yellow metal has now declined 9% from its peak of $3,500 last month, when heightened trade war fears had propelled it to record highs.
Investor demand for gold began to fade after news emerged last week that U.S. and Chinese officials would meet in Geneva for trade negotiations. The talks concluded with a truce announced on Monday, easing immediate trade concerns and boosting risk appetite in equity markets.
“After the tariff truce announced over the weekend, we’ve seen stock markets surge higher, and at least in the short term, this has removed some of the safe haven focus that has helped propel gold to record highs in recent months,” said Ole Hansen, head of commodity strategy at Saxo Bank.
Hansen warned of further downside risk, noting, “If we take out that $3,200 level, then we could fairly quickly test $3,165.”
Traders are now eyeing Thursday’s U.S. producer price index (PPI) data for clues on the Federal Reserve’s next policy move, following cooler-than-expected consumer inflation data earlier this week.
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