Gold prices took a notable hit on Monday as renewed optimism over US-China trade relations diminished the metal’s safe-haven allure. Following two days of high-level talks in Geneva, both US and Chinese officials reported “substantial progress,” fueling hopes that the world’s two largest economies are moving closer to resolving their longstanding trade disputes.
Key Highlights:
Gold Price Movement: Spot gold dropped by 2.3% to hover near $3,275 per ounce, reversing last week’s gains that saw it briefly touch record highs above $3,500. US gold futures also slipped by 1.2%, reflecting a broad-based shift in investor sentiment.
Market Drivers: The positive signals from trade negotiations led investors to rotate out of gold and into equities and other risk assets. The US dollar index climbed to a two-week high, further pressuring gold prices as a stronger dollar makes the metal more expensive for overseas buyers.
Trade Talks Update: US Treasury Secretary Scott Bessent and China’s Vice Premier He Lifeng characterized the discussions as “constructive and forward-looking.” While no concrete deal has been announced, both sides are expected to release a joint statement outlining areas of agreement and next steps.
Safe-Haven Demand Cools: Gold’s recent rally was underpinned by global economic uncertainty, recession fears, and geopolitical tensions. The easing of US-China friction, coupled with a pause in hostilities elsewhere, has reduced the urgency for safe-haven investments.
Analyst Perspective: Market analysts caution that while gold may face short-term headwinds if trade optimism persists, underlying factors such as central bank buying, inflation concerns, and potential geopolitical flare-ups could still support prices in the medium term.
Investors now await further developments from the US-China front and upcoming US inflation data, which could shape gold’s trajectory in the weeks ahead.
Sources: Reuters, CNBC, FXStreet
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