Gold price declines over 1% on US-China trade talk optimism
Gold prices fell more than 1% on Wednesday as confirmation of US-China trade talks diminished the appeal of safe haven assets.
By 10:35 a.m. ET, spot gold had fallen 1.2% to $3,384.80 per ounce, having fallen as much as 2.1% earlier. US gold futures were also down 0.9% to $3,391.70 an ounce.
The pullback follows an announcement late Tuesday that Washington and Beijing will formally meet for the first time since US President Donald Trump imposed his sweeping tariffs.
“China and the United States are formally trying to start a conversation on tariffs, igniting optimism in risk markets,” Bart Melek, head of commodity strategies at TD Securities, told Reuters.
Meanwhile, investors largely shrugged off聽escalating tensions in South Asia, where India conducted military strikes against Pakistan. A conflict between the nuclear-armed neighbors would typically support gold, though easing global trade tensions has taken a larger narrative.
Bullion’s rise
Bullion has surged almost 30% this year amid widespread market chaos unleashed by Trump鈥檚 aggressive trade policies. In late April, the metal surpassed the $3,500-an-ounce milestone for the first time, before losing some ground to improved market sentiment.
Still, experts and banks are predicting the metal to reach even higher heading into the second half of the year. Bank of America recently said it expects prices to push higher again in second half of 2025, potentially hitting $4,000.
JPMorgan, too, said it sees gold prices reaching $4,000 in the second quarter of 2026.
Other drivers
Behind gold’s ascent has been central banks’ efforts to purchase the metal for asset diversification. Official data showed that China added gold to its reserves for the sixth straight month in April.
Investors are also keeping close tabs on the Federal Reserve’s policy decision, which is due later in the day.
“If the Fed surprises and is a lot more hawkish than the market expects, we think there is strong support above $3,100,” TD’s Melek said.
In the past, the Fed had indicated that it was in no hurry to cut rates, and market consensus is that there will be no cuts before July.
(With files from Bloomberg and Reuters)
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