Gold prices steadied on Tuesday following a steep decline, as renewed optimism over US-China trade relations reduced investor demand for safe-haven assets, Bloomberg reports.
Spot gold was trading around $3,239.66 an ounce in Singapore, holding near levels seen after a 2.7% drop on Monday. The pullback followed announcements that the United States and China would temporarily reduce tariffs in a bid to ease trade tensions. Under the agreement, the US will lower duties on Chinese imports from 145% to 30% for a 90-day period, while Beijing will cut its tariffs on most American goods to 10%.
The shift toward improved diplomatic relations has led investors to favor riskier assets, including equities, diminishing the immediate appeal of gold. Simultaneously, a rising US dollar and higher Treasury yields — both of which tend to weigh on gold — added to the pressure on prices.
Expectations for Federal Reserve policy have also adjusted. Markets are now pricing in just two interest rate cuts in 2025, suggesting a reassessment of inflation risks and reducing gold’s attractiveness, given that it does not generate interest.
Despite recent losses, gold remains nearly 25% higher for the year, buoyed by geopolitical concerns and ongoing macroeconomic uncertainty. Some analysts note that while the current calm in US-China relations is encouraging, it may be temporary.
“The devil is in the details during negotiations,” said Christopher Wong, strategist at Oversea-Chinese Banking Corp. “Some degree of caution remains warranted, as we see consolidation in the range of $3,150 to $3,350 an ounce.”
Elsewhere in precious metals, silver and platinum posted gains, while palladium held steady. The Bloomberg Dollar Spot Index, which gained 1% on Monday, edged lower on Tuesday, slightly easing pressure on bullion prices.
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