Gold prices recorded modest gains during the early Asian trading session on Thursday, edging higher to around $3,180. Despite the uptick, the potential for further upside appears limited in the short term, as improved risk appetite and progress in global trade negotiations weigh on safe-haven demand.
Easing Trade Tensions Dampen Gold’s Safe-Haven Appeal
Investor sentiment has shifted as tensions in the ongoing US-China trade dispute show signs of easing. After two days of negotiations in Geneva, both countries agreed to reduce tariffs, signaling a step forward in trade relations. The United States announced a significant reduction in tariffs on Chinese imports, lowering rates from 145% to 30%. In response, China cut tariffs on US goods from 125% to 10%.
“Overall, it’s an improved risk sentiment that for now has reduced gold’s appeal,” commented Ole Hansen, head of commodity strategy at Saxo Bank.
Iran Nuclear Deal Prospects Add to Positive Market Sentiment
In another positive development, a top adviser to Iran’s supreme leader, Ali Shamkhani, announced that Iran is willing to sign a nuclear agreement with the United States under specific conditions. This deal would involve lifting US economic sanctions, further contributing to the broader risk-on sentiment in global markets.
Economic Data and Fed Commentary in Focus
While improved geopolitical dynamics have placed gold on the defensive, lingering trade uncertainties and potential flare-ups in geopolitical risks continue to provide a degree of support for the precious metal.
Investors are now turning their attention to key economic data releases from the United States. The April Retail Sales and Producer Price Index (PPI) reports, due later on Thursday, are expected to offer fresh insights into the health of the US economy. Additionally, markets will be closely watching remarks from Federal Reserve Chair Jerome Powell, which could influence market expectations for future monetary policy.
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