Gold prices fell on Monday as easing trade tensions between the United States and China boosted investor risk appetite, reducing demand for the precious metal as a safe haven. Additionally, a stronger U.S. dollar added further pressure on gold prices.
As of 0625 GMT, spot gold had dropped 0.8% to $3,292.11 an ounce, retreating from its record high of $3,500.05 set on April 22. According to Tim Waterer, Chief Market Analyst at KCM Trade, “Financial markets and risk assets, in particular, are feeling slightly better about the tariff situation now compared to the chaotic first week of April.”
Waterer attributed the decline in gold prices to growing optimism regarding a potential U.S.-China trade deal, following recent statements from the White House. These remarks have led to a reduction in the safe-haven demand that typically drives gold prices higher.
U.S. President Donald Trump confirmed that tariff talks with China were ongoing, while last week, his administration expressed willingness to de-escalate the trade conflict between the two largest economies, which has heightened fears of a global recession. In a positive move, China also exempted certain U.S. imports from steep tariffs. However, Trump’s claim that negotiations were progressing was quickly contradicted by China, and on Sunday, U.S. Treasury Secretary Scott Bessent did not support Trump’s assertion.
Gold, traditionally viewed as a hedge against economic and political uncertainty, tends to perform well in low-interest-rate environments. However, the recent easing of tensions in the trade war has lessened the urgency for safe-haven assets.
Amid these developments, participants at the International Monetary Fund and World Bank Spring Meetings noted that the Trump administration remained divided on its tariff demands from trade partners.
Key economic data due this week, including the U.S. job openings report on Tuesday, Personal Consumption Expenditures (PCE) on Wednesday, and the non-farm payrolls report on Friday, could provide further insights into the Federal Reserve’s policy direction, potentially influencing gold prices further.
Related topics:
- India Surpasses China in Gold Purchases, Buying 51% More in Three Months
- Qilu Bank Enhances Support for Small Businesses with Innovative Financial Tools
- Bitcoin Poised for a Surge Amid Gold’s Delivery Delays, Expert Claims
