Optimism over potential US-China trade talks weakened demand for safe-haven assets
07 May 2025 - 08:23
byAnushree Mukherjee
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Bengaluru — Gold prices fell on Wednesday as optimism over potential US-China trade talks weakened demand for safe-haven assets, while investors braced for the Federal Reserve’s policy decision due later in the day.
Spot gold was down 1.3% at $3,383.88/oz by 4.32am GMT. The metal climbed nearly 3% in the previous session.
US gold futures fell about 1% to $3,391.80. “Gold seems to be pulling back amid a broad-based ‘risk on’ move across markets ... this is a pro-cyclical configuration that might echo optimism amid clues that the US and China have started real trade negotiations,” said Ilya Spivak, head of global macro at Tastylive.
US treasury secretary Scott Bessent and chief trade negotiator Jamieson Greer will meet top Chinese economic official He Lifeng in Switzerland this weekend for talks.
Both countries imposed tit-for-tat tariffs last month, triggering a trade war that fuelled the fear of a global recession.
On Tuesday, US President Donald Trump said he and top administration officials would review potential trade deals over the next two weeks to decide which ones to accept.
The market’s focus will also be on the Federal open market committee (FOMC) meeting later in the day, where the US central bank is expected to hold interest rates steady.
The committee would remain vague to keep as much flexibility as possible as it tried to discern what this trade war would mean for growth and inflation, Spivak said.
Traders are expecting rate cuts of 80 basis points this year, starting in July.
Fed chair Jerome Powell’s remarks are also awaited for clues into the potential timing of future rate reductions.
Gold, traditionally seen as a hedge against economic and political uncertainties, thrives in a low interest rate environment.
On the geopolitical front, India said it attacked Pakistan early following a deadly attack on tourists in Kashmir last month. Pakistan reported eight deaths and said it was responding to the Indian strikes.
Spot silver eased 0.7% to $33.01/oz, platinum dipped 0.1% to $983.60 and palladium lost 0.7% to $967.64.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
US-China trade talks cast a shadow over gold
Optimism over potential US-China trade talks weakened demand for safe-haven assets
Bengaluru — Gold prices fell on Wednesday as optimism over potential US-China trade talks weakened demand for safe-haven assets, while investors braced for the Federal Reserve’s policy decision due later in the day.
Spot gold was down 1.3% at $3,383.88/oz by 4.32am GMT. The metal climbed nearly 3% in the previous session.
US gold futures fell about 1% to $3,391.80. “Gold seems to be pulling back amid a broad-based ‘risk on’ move across markets ... this is a pro-cyclical configuration that might echo optimism amid clues that the US and China have started real trade negotiations,” said Ilya Spivak, head of global macro at Tastylive.
US treasury secretary Scott Bessent and chief trade negotiator Jamieson Greer will meet top Chinese economic official He Lifeng in Switzerland this weekend for talks.
Both countries imposed tit-for-tat tariffs last month, triggering a trade war that fuelled the fear of a global recession.
On Tuesday, US President Donald Trump said he and top administration officials would review potential trade deals over the next two weeks to decide which ones to accept.
The market’s focus will also be on the Federal open market committee (FOMC) meeting later in the day, where the US central bank is expected to hold interest rates steady.
The committee would remain vague to keep as much flexibility as possible as it tried to discern what this trade war would mean for growth and inflation, Spivak said.
Traders are expecting rate cuts of 80 basis points this year, starting in July.
Fed chair Jerome Powell’s remarks are also awaited for clues into the potential timing of future rate reductions.
Gold, traditionally seen as a hedge against economic and political uncertainties, thrives in a low interest rate environment.
On the geopolitical front, India said it attacked Pakistan early following a deadly attack on tourists in Kashmir last month. Pakistan reported eight deaths and said it was responding to the Indian strikes.
Spot silver eased 0.7% to $33.01/oz, platinum dipped 0.1% to $983.60 and palladium lost 0.7% to $967.64.
Reuters
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