Gold prices dropped on Monday as signs of progress in trade discussions between the United States and China reduced investor demand for safe-haven assets.
Market optimism over constructive talks pushed investors toward riskier assets, while the US dollar strengthened, further pressuring gold.
As of 02:33 GMT, spot gold was down 1.4% to $3,277.68 per ounce, while US gold futures declined 1.9% to $3,281.40.
The latest round of trade negotiations between US and Chinese officials concluded in Geneva over the weekend with both sides issuing positive signals. US representatives emphasized advancements aimed at narrowing the trade deficit, and Chinese Vice Premier He Lifeng announced that a joint statement would be released Monday.
Jigar Trivedi, senior commodity analyst at Reliance Securities, attributed gold’s retreat to both the strengthening dollar and easing geopolitical tension.
“The dollar index has advanced as the Trump administration touted progress in trade negotiations,” he said, noting that this weighed on gold prices.
Historically, gold performs well during periods of economic or political instability, and in low-interest rate environments. However, with geopolitical risks appearing to moderate and the dollar gaining strength, market interest in bullion is softening. Analysts believe the yellow metal could face further pressure in the short term.
“Gold may continue to decline as haven demand drops and the dollar appreciates,” Trivedi added, projecting a potential fall to $3,200 per ounce.
Nick Twidale, chief market analyst at AT Global Markets in Sydney, said prices could fall even further if positive trade developments continue.
“If we get concrete trade details, gold could test levels around $3,100,” he noted.
Still, some analysts remain cautious about predicting a sustained downturn. Robert Rennie, head of commodity and carbon research at Westpac Banking Corp., believes gold will find solid support near $3,200, particularly if broader market uncertainties persist.
“Dips to and through $3,200 in gold should be well supported for an eventual move to fresh record highs,” he said.
Before Monday’s selloff, speculative investors had already been pulling back. Hedge funds reduced their bullish positions to the lowest level in over a year, reflecting growing optimism about a trade breakthrough between the US and China, according to Commodity Futures Trading Commission data.
Despite recent volatility, gold is still up about 25% for the year, having reached a record high above $3,500 per ounce last month. Strong central bank demand and robust Chinese retail interest have supported prices, even as recent gains have tapered.
Other precious metals saw mixed performance on Monday: silver held steady at $32.70 an ounce, platinum edged up 0.3% to $998.04, and palladium rose 0.4% to $979.73.
Markets are also closely watching developments in global hotspots. A fragile ceasefire between India and Pakistan continued to hold over the weekend, while diplomatic efforts in Ukraine are expected to intensify as President Zelenskiy calls for direct engagement with Russia.
Meanwhile, Cleveland Federal Reserve President Beth Hammack said Friday that the Fed needs more time to assess the economic impact of recent US trade policies before considering any interest rate adjustments.
The latest news in your social feeds
Subscribe to our social media platforms to stay tuned