Gold prices fell to around $3,335 early in the Asian session on Tuesday, with the precious metal retreating as the US Dollar (USD) rebounded and tensions between the United States and China showed signs of easing.
On Friday, China exempted certain US imports from its steep 125% tariffs, raising optimism that the trade dispute between the two nations could be nearing a resolution. However, China swiftly dismissed US President Donald Trump’s claim that negotiations were underway. US Treasury Secretary Scott Bessent clarified on Monday that while the US is in contact with China, it is up to Beijing to take the initial step in de-escalating the tariff conflict, largely due to the ongoing trade imbalance between the countries. As concerns about the US-China trade war eased, demand for safe-haven assets like gold weakened. Additionally, the stronger US Dollar presented further challenges for the yellow metal.
“Recent comments from the White House have fueled optimism that a US-China trade deal could be on the horizon, reducing the safe-haven appeal of assets such as gold,” said Tim Waterer, Chief Market Analyst at KCM Trade.
Conversely, rising expectations that the Federal Reserve may resume its rate-cutting cycle in June could provide some support for gold. The Fed is currently in its blackout period ahead of the Federal Open Market Committee (FOMC) meeting scheduled for May 7.
Traders are closely monitoring upcoming economic data, including the preliminary US Q1 GDP report and April employment figures. The market expects the US economy to add 135,000 jobs in April, with the unemployment rate remaining steady at 4.2%. If the data falls short of expectations, it could weigh on the US Dollar and potentially push gold prices higher in the short term.
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