Gold prices dropped to five-week lows on Wednesday, falling through the $3,200 level, as global risk appetite improved despite renewed geopolitical tensions. Strong gains in Shanghai equities and a rally in the Nasdaq 100 helped offset safe-haven demand, pressuring bullion prices lower.
Spot gold declined to $3,185 per ounce in London, down 9% from last month’s record high of $3,500. In New York, Comex futures retreated 1.8% to $3,187 per ounce. Gold in Shanghai also closed at a five-week low of ¥758 per gram, marking an 8.6% drop from late-April’s peak.
“The recent cooling of risk aversion is a short-term factor that will weigh on gold,” said Xia Yingying, head of precious metals and energy research at Nanhua Futures.
US-China trade relations remain tense despite Monday’s truce. The US Bureau of Industry and Security accused Chinese tech giant Huawei of violating export controls by using US-made components in its AI chips. Beijing, meanwhile, criticized the UK’s latest trade deal with the US, claiming it undermines third-party nations by excluding Chinese suppliers.
Still, equities rallied. China’s CSI300 index rose to near two-month highs, while the Nasdaq 100 gained 1.3% year-to-date, erasing losses from last month’s sharp selloff.
Silver prices followed gold lower, slipping to $32.14 per ounce in London and New York.
ICBC, China’s largest bank and a major bullion clearer in London, warned that improving market sentiment from tariff reductions could further weigh on gold. The bank also cited Beijing’s fiscal and monetary stimulus as potential bearish factors.
Fresh data showed Chinese commercial bank lending in April fell to its lowest since July 2024, missing forecasts by 60%, even after the People’s Bank of China cut interest rates and reserve requirements last week.
Meanwhile, UK asset manager RBC Brewin Dolphin reduced its gold holdings last month, citing record highs as an opportunity to take profits and reallocate to cash.
On the geopolitical front, US President Donald Trump continued his Middle East tour, meeting with Syrian President Ahmed al-Sharaa and signing defense and investment deals with Qatar. The visit comes amid rising international scrutiny of Israel’s actions in Gaza, now facing legal challenges in the UK High Court.
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