Gold prices fell on Monday as positive signals from the U.S.-China trade talks eased market concerns, shifting investor focus away from safe-haven assets towards riskier investments.
In Dubai, gold rates marked notable declines, with 24-carat gold losing AED4.5 to AED396.25 and 22-carat gold declining AED4.25 to AED367. Additionally, 21-carat gold fell AED4 to AED352, while 18-carat gold dipped AED3.5 to AED301.5.
Globally, spot gold lost 1.34 percent to $3,281.59, as of 4:06 GMT, while U.S. gold futures dipped 1.75 percent to $3,285.49.
The U.S. dollar index gained 0.22 percent to 100.56 as the Trump administration signaled progress in trade negotiations with China over the weekend in Switzerland, which weighed on gold prices.
U.S.-China trade talks end on positive note
Gold prices fell as the U.S. and China ended their trade talks on a positive note on Sunday, with U.S. officials signaling a “deal” to reduce the U.S. trade deficit, while Chinese officials said they had reached “important consensus”.
“Gold closed in the green on Friday, up 0.6 percent. However, the rally was short-lived as prices stuck to intraday losses through the Asian session on Monday, and the latest optimism over a U.S.-China trade deal undermined demand for traditional safe-haven assets,” stated Vijay Valecha, chief investment officer, Century Financial.
The U.S. and China had imposed tit-for-tat tariffs on each other last month, triggering a trade war that raised fears of a global recession and propelled gold prices to several record highs. Ahead of the talks, U.S. President Donald Trump said on Friday that an 80 percent tariff on China “seems right.”
Since taking office in January, Trump has raised tariffs on imports from China to 145 percent, in addition to those he imposed on many Chinese goods during his first term and the duties imposed on Beijing by the Biden administration.
China responded by imposing export curbs on some rare earth elements and raising tariffs on U.S. goods to 125 percent, in addition to charges on several products, including soybeans and liquefied natural gas.
“The U.S. and China will temporarily lower tariffs on each other’s products, according to a joint statement released in Geneva, in a move to cool trade tensions and give the world’s two largest economies three more months to resolve their differences,” added Valecha.
Investors await U.S. inflation data
Gold, traditionally seen as a hedge against economic and political tensions, thrives in a low-interest rate environment. On Friday, Cleveland Federal Reserve President Beth Hammack said the central bank needs more time to see how the economy responds to Trump’s tariffs and other policies before taking a policy decision.
Traders are now eyeing the release of the U.S. consumer price index on Tuesday for additional insights into the Fed’s monetary policy path.
In the short term, gold prices are expected to decline as the U.S. dollar recovers and trade tensions decline. In addition, gold prices declined as tensions eased between India and Pakistan, further dampening safe-haven demand.
Read: Bitcoin price skyrockets past $103,000: Can the rally last?
Other precious metals
As gold prices declined, the precious metals market was positive on Monday. Spot silver gained 0.22 percent to $32.77 while platinum rose 0.36 percent to $998.53. In addition, palladium gained close to 0.50 percent to $980.52.
