**Gold Price Drops 0.63% on Tuesday Amid Easing US-China Trade Tensions**
Gold prices fell by 0.63% on Tuesday during the North American session, as the yellow metal’s safe-haven appeal weakened. This decline comes amid hopes for a de-escalation of the US-China trade war, which continue to drive investors toward riskier assets like US equities.
At the time of writing, XAU/USD is trading at $3,955, after bouncing off three-week lows below $3,900. The yellow metal has lost some of its safe-haven appeal ahead of the highly anticipated meeting between US President Donald Trump and Chinese President Xi Jinping.
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### Trade War Developments and Gold’s Safe-Haven Status
The US-China trade war appears to be easing following last week’s meeting between senior officials in Malaysia. Discussions centered around tariffs, shipping fees, fentanyl, and rare-earth export controls have set the stage for a potential agreement. The Trump-Xi summit scheduled for Thursday will be closely watched by markets for further cues.
Meanwhile, ongoing geopolitical tensions could limit Gold’s losses. According to The Jerusalem Post, sources have indicated that “the response to the current violations by Hamas will be significantly greater than the response last time.” Should hostilities in the Middle East escalate, bullion could recover some of the losses it has recorded over the past two weeks and may aim to reclaim the $4,000 level.
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### Gold’s Performance and Fed Rate Expectations
Gold, traditionally a hedge during times of uncertainty and a non-yielding asset, has surged 51% this year. This strong performance has been supported by geopolitical tensions, trade disputes, and lower interest rates in the US.
Looking ahead, the Federal Reserve is widely expected to cut interest rates by 25 basis points at its Wednesday meeting, with another reduction anticipated in December. These expectations, based on the Prime Market Terminal interest rate probability tool, continue to support Gold prices.
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### Market Movers: Dollar Weakness and Central Bank Activity
The US Dollar Index (DXY), which measures the dollar against six major currencies, edged down 0.11% to 98.68 on Tuesday. The US 10-year Treasury note yield remained steady at 3.981%, while real yields—which tend to move inversely to Gold—held unchanged at 1.701%.
Gold prices could also gain momentum if central banks resume buying. South Korea’s central bank is reportedly considering increasing its Gold reserves over the medium to long term. Heung-Soon Jung, Head of Reserve Investment at the Bank of Korea, shared this insight at a precious metals conference, noting that the bank currently holds 104 metric tons of Gold, unchanged since 2013.
In addition, Bank of America recently revised its Gold forecast to $3,800 per ounce for Q4, citing that “the market has become overbought, which finally led to this week’s correction.”
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### Technical Outlook: Sellers in Control Below $4,000
Despite the recent dip below $3,900, Gold’s broader uptrend remains intact. Prices slid to as low as $3,886, marking a three-week low, while the Relative Strength Index (RSI) has continued to decline, signaling growing bearish momentum.
If Gold closes the day below $4,000, traders can expect prices to fluctuate within a range between $3,900 and $4,000. A further breakdown below this support would expose the October 28 low at $3,886, followed by the 50-day Simple Moving Average (SMA) near $3,779.
Conversely, if XAU/USD manages to clear the $4,000 mark, resistance levels to watch include $4,100 and the October 22 peak at $4,161.
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**Summary:** Gold prices have retreated amid easing US-China trade tensions and rising risk appetite. However, geopolitical uncertainties and expected Fed rate cuts may continue to underpin the metal’s value. Traders should watch key technical levels for clues on the next price direction.
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