Gold prices declined on Monday as investor sentiment improved following U.S. President Donald Trump’s decision to delay imposing steep tariffs on European Union imports. The move provided a window for negotiations and shifted capital flows into risk assets, dampening demand for the traditional safe-haven metal.
Market Reaction: Risk-On Mood Pressures Bullion
Spot gold dropped as much as 1% during early trading, before paring losses to trade around $3,339.20 per ounce by 10:30 a.m. ET. Concurrently, U.S. gold futures settled 0.9% lower at $3,334.90/oz.
The pullback comes after a strong performance last week, when gold recorded its best weekly gain in six weeks, fueled by Trump’s initial tariff threat of 50% on EU goods starting June 1.
But sentiment shifted sharply on Sunday after the White House announced that the tariff imposition would be postponed to July 9, giving negotiators more time to strike a deal. The delay sent U.S. equity futures and European stocks higher, redirecting investor capital away from gold and into equities.
“I would call it a range-trading day,” said Giovanni Staunovo, commodities analyst at UBS. “The modest drop in prices is largely a response to Trump’s delay on EU tariffs.”
Outlook Still Bullish Despite Near-Term Pressure
Despite Monday’s retreat, analysts maintain a constructive outlook for gold in the medium term.
UBS’s Staunovo reiterated his expectation that gold will retest $3,500/oz in the coming months, citing unresolved geopolitical risks and economic uncertainties.
Citigroup echoed this sentiment, raising its short-term target for gold to $3,500, up from $3,150, on the back of:
Ongoing tariff uncertainties
Heightened geopolitical tensions
U.S. fiscal deterioration linked to mounting deficits
Asia Demand Robust: China Gold Imports Surge
Fundamental support for gold was bolstered by data from China, the world’s largest gold consumer. According to figures released Monday:
China’s net gold imports via Hong Kong more than doubled in April, compared to March.
This marks the highest level of imports since March 2024, reinforcing confidence in Asian demand resilience.
“Strong Chinese buying reflects continued confidence in gold amid ongoing global instability,” noted a regional precious metals analyst.
Bottom Line
While Trump’s delay in EU tariffs sparked a temporary pullback in gold, broader macro forces—including central bank demand, recession fears, and geopolitical volatility—continue to support the bullish case for the metal.
Markets will now turn attention to a high-stakes week of U.S. economic data and Fed communications, including:
Durable Goods Orders
Consumer Confidence
FOMC Minutes
Q1 GDP
Core PCE Index
These releases are expected to inject volatility into the gold market, and could be pivotal in determining whether prices resume their uptrend toward $3,500.
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