Gold Prices Decline Amid US-China Trade Optimism

Gold values experienced a decline on Wednesday following remarks from US President Donald Trump. Trump’s decision to retract his earlier threats to dismiss Federal Reserve Chair Jerome Powell, coupled with his optimistic outlook regarding a potential trade agreement with China, diminished the allure of gold as a safe-haven asset.

Spot gold decreased by 0.7%, reaching $3,357.11 an ounce by 0256 GMT. Similarly, US gold futures saw a drop of 1.5%, settling at $3,366.80.

Kelvin Wong, a senior market analyst at OANDA, noted that the prospect of US-China negotiations and Trump’s reversal on his threat to remove Powell triggered a sell-off in gold, pushing it into oversold territory in the short term.

US equities and the dollar showed resilience after Trump’s announcement on Tuesday, where he stepped back from his threats to terminate Powell after repeated criticism regarding interest rate policies.

A stronger dollar typically increases the cost of gold for international purchasers.

Trump conveyed confidence that a trade accord with China could significantly lower tariffs on Chinese products, suggesting that the ultimate agreement would deviate considerably from existing tariff levels.

US Treasury Secretary Scott Bessent voiced his expectation of reduced tensions in US-China trade relations, though he acknowledged that negotiations with Beijing have not yet commenced and are anticipated to be protracted.

Wong of ONADA suggested that there is still potential for upward movement in gold prices, given the absence of complete bullish exhaustion from the upper bond level.

Neel Kashkari, President of the Federal Reserve Bank of Minnesota, stated that it remains premature to determine how short-term borrowing costs may need adjustments in response to Trump’s tariffs and their projected impact on inflation and the economy.

Gold, often regarded as a safeguard against global instability and inflation, reached its 28th record high this year on Tuesday, peaking at $3,500 for the first time.

JP Morgan projects that gold prices will surpass the $4,000-per-ounce mark in the coming year.

Elsewhere, spot silver increased by 0.5% to $32.67 an ounce, platinum declined by 0.2% to $956.53, and palladium experienced a 0.2% decrease to $933.72.