Gold Prices Dip on US-China Trade Progress, First Weekly Decline Since August
Gold prices fell 1.4% to approximately $4,053 per ounce on Monday, following progress in the US-China trade negotiations. The prospect of a major trade deal between the two economic giants has reduced investor demand for gold as a safe-haven asset.
Earlier last week, gold had reached a record high just above $4,380 per ounce. However, this recent development triggered a reversal, resulting in gold’s first weekly decline since mid-August, with a 3.3% drop recorded. Despite the pullback, gold remains up an impressive 55% year-to-date, supported by central bank purchases and investor concerns over sovereign debt and budget deficits.
Market Insights
Kyle Rodda, senior financial market analyst at Capital.com, commented that the market is now returning to more fundamental levels after the better-than-expected US-China trade news. He noted that the initial reaction in gold prices reflected this shift in investor sentiment.
Central Bank Decisions in Focus
Gold investors are closely watching upcoming central bank meetings this week. The Federal Reserve is expected to announce a 25 basis point rate cut, a move that typically benefits gold prices since the metal does not yield interest and becomes more attractive as borrowing costs fall.
Meanwhile, the European Central Bank and Bank of Japan are also scheduled to meet but are anticipated to keep rates steady. The outcomes of these meetings could significantly influence gold’s near-term direction.
World Gold Council Conference Highlights
The London Bullion Market Association’s conference is currently underway in Kyoto, Japan, attracting nearly 1,000 gold traders, brokers, and refiners—a record attendance. John Reade, market strategist at the World Gold Council, addressed the event, noting that central bank demand has weakened compared to previous periods.
Reade highlighted discussions at the conference suggesting that a gold price around $3,500 per ounce would represent a healthy and stable market level.
Market Performance and Technical Outlook
As of Monday afternoon in Singapore, spot gold was trading at $4,080.47 per ounce, marking a 0.7% decline for the day. The recent rally appeared to overextend the market, prompting the current correction.
Silver prices also declined on Monday, extending last week’s 6.3% drop. In contrast, industrial metals such as platinum and palladium edged higher, moving independently from gold’s downward trend.
The precious metals complex showed mixed performance across different assets, and professional dealers may welcome the price correction, viewing current levels as elevated. A return to lower prices could help stabilize trading conditions moving forward.
In summary, while gold has experienced a short-term pullback due to positive trade developments and market adjustments, its long-term fundamentals remain strong amid ongoing economic uncertainty and central bank dynamics.
https://coincentral.com/us-china-trade-breakthrough-sends-gold-tumbling-from-record-highs-heres-why/
