Gold prices fell on Wednesday as the easing of U.S.-China trade tensions diminished safe-haven demand, while investors turned their attention to upcoming inflation data to evaluate the Federal Reserve‘s policy direction.
In Dubai, gold rates experienced a decline, with 24-carat gold dropping AED3.25 to reach AED392.00. Similarly, 22-carat gold decreased by AED3.25, bringing its price to AED362.75. Furthermore, 21-carat gold saw a reduction of AED2.75, now priced at AED348.00, while 18-carat gold fell AED2.50, resulting in a price of AED298.25.
Spot gold experienced a decline of 0.4 percent, reaching $3,234.32 an ounce as of 02:31 GMT (currently trading above AED3,229). U.S. gold futures softened by 0.3 percent, settling at $3,237.00 (currently trading above $3,232).
“Positive developments in US trade policy (are) diminishing the appeal of gold in the short-term,” Reuters reported, citing Kyle Rodda, a financial market analyst at Capital.com.
Tariff reductions
“I think that if we see continued progress in trade negotiations and deals being done between the US and its trading partners, gold can pull back further. $3,200 is a pretty critical level of support.” The U.S. is set to reduce the “de minimis” tariff for low-value shipments from China to 30 percent, according to a White House executive order and industry experts, further mitigating a potentially damaging trade war between the world’s two largest economies.
On Monday, U.S. President Donald Trump stated that he does not anticipate tariffs on Chinese imports returning to 145 percent after the 90-day pause, expressing his belief that a deal will be reached between Washington and Beijing. Meanwhile, the United States Department of Labor reported that the consumer price index rose 0.2 percent in April, whereas economists surveyed by Reuters had anticipated a 0.3 percent increase following a 0.1 percent decline in March.
Read more: Dubai gold prices rise AED6.25, global rates hover near over one-week low
Market expectations on interest rates
Traders are awaiting the Producer Price Index data, scheduled for release on Thursday, for insights into the Fed’s interest rate trajectory. The market forecasts 53 basis points of rate cuts this year, beginning in September. Gold, which is traditionally seen as a hedge against inflation, tends to perform well in a low-interest rate environment.
On Tuesday, Trump reiterated his call for the Fed to lower rates, asserting that prices for gas, groceries, and “practically everything else” are decreasing. Spot silver slipped 0.8 percent to $32.63 an ounce, platinum remained steady at $987.85, and palladium declined 0.7 percent to $950.18.
