Gold prices declined on Monday as easing trade tensions between the United States and China reduced market fears, prompting investors to shift capital from traditional safe-haven assets into riskier investments, Reuters reported.
Spot gold fell by 1.4% to $3,277.34 per ounce as of 04:32 GMT (06:32 Kyiv time), reflecting the broader market’s shift in sentiment following optimistic developments in trade negotiations.
“The dollar index rose after the Trump administration praised the progress in trade negotiations with China over the weekend in Switzerland, which directly impacted gold prices,” said Jigar Trivedi, Senior Commodity Analyst at Reliance Securities. A stronger dollar typically weighs on gold, as it makes the metal more expensive for holders of other currencies.
The latest round of high-level talks concluded on Sunday with positive statements from both sides. US officials highlighted an “agreement” aimed at reducing the American trade deficit, while Chinese Vice Premier He Lifeng announced that an “important consensus” had been reached. A joint statement outlining the outcomes of the discussions is expected to be released in Geneva on Monday.
The negotiations come amid a backdrop of escalating trade tensions. Last month, both nations imposed reciprocal tariffs, sparking fears of a trade war that could tip the global economy toward recession. Despite the weekend’s progress, many of President Donald Trump’s current and former advisors, according to Reuters sources, believe the US will maintain higher tariffs even after a formal deal is reached.
Traditionally regarded as a hedge against economic and political uncertainty, gold benefits from lower interest rates and heightened geopolitical risks. However, as market anxiety subsides and risk appetite improves, demand for gold tends to weaken.
Adding to gold’s headwinds, Cleveland Federal Reserve President Beth Hammack indicated on Friday that the Fed would adopt a wait-and-see approach regarding the economic impact of tariffs and other trade measures before deciding on monetary policy adjustments.
Market participants are also closely watching for the release of the US Consumer Price Index (CPI) on Tuesday, which could provide further signals on the Federal Reserve’s monetary policy trajectory.
“In the near term, gold may continue to face downward pressure. With the dollar poised for further strength and geopolitical risks receding, safe-haven demand could diminish, potentially driving gold prices down to $3,200 per ounce,” Trivedi added.
Meanwhile, other precious metals posted modest gains. Spot silver rose 0.4% to $32.84 per ounce, platinum advanced 0.7% to $1,001.90, and palladium climbed 0.6% to $981.20 per ounce.
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