Gold Slips as China-US Deal Talk Lures Money Back to Stocks

With input from Bloomberg and Reuters.

Gold took a sharp breather Monday as hopes for a thaw in US–China trade tensions sent investors tiptoeing out of havens and back into equities ahead of a week packed with central-bank decisions. Spot bullion was down about 2% to $4,029.69 an ounce by 11:22 GMT, extending a pullback that began after prices smashed a record at $4,381.21 on Oct. 20. US December futures slid roughly 2.3% to $4,042.80.

The mood turned risk-on across Asia after signals of detente between Washington and Beijing. President Donald Trump said the two sides should “come away with” a trade deal after negotiators sketched out a framework for him and President Xi Jinping to consider at their upcoming meeting in South Korea. That kind of headline cools the safety bid that’s powered gold’s blistering rally since mid-August — and you could see it in stocks sprinting higher while bullion sagged.

There’s also a rates story here. With September inflation coming in softer than feared, traders are bracing for the Federal Reserve to trim its policy rate by a quarter point on Wednesday. UBS analyst Giovanni Staunovo put it bluntly: talk of a trade deal is helping “risky assets” and pressuring gold, but lower tariffs could also give the Fed more room to cut, which over time supports non-yielding metals through lower real rates. With a 25-basis-point move already priced, the real action may come from Chair Jerome Powell’s guidance on what happens next.

Even with the stumble — a drop of more than 5% from last week’s peak — gold is still up more than 55% this year, underpinned by heavy central-bank buying, anxiety over deficits and currencies, and a steady bid from investors hedging policy and geopolitical shocks. The speed of the recent run set up profit-taking, and when overbought signals flashed, some funds simply rang the register. That’s also created a window for bargain hunters; dealers from Singapore to the US say interest jumped as prices backed off the highs.

The metal’s retreat arrives as nearly a thousand traders, refiners and bankers descend on Kyoto for the London Bullion Market Association’s annual gathering — a timely backdrop for a market trying to gauge how much froth is left and how deeply falling real yields can still bite.

Elsewhere in the complex, silver dropped about 2.3% to $47.48 an ounce, while platinum eased to roughly $1,593.43 and palladium to about $1,417.58. The European Central Bank and Bank of Japan are also on deck this week, with investors expecting them to hold steady even as the Fed eases — another reminder that, for gold, the path of policy and the temperature of geopolitics still matter more than any single session’s swing.