Gold prices fell sharply in early Asian trade on Monday, as investors left safe havens on the wayside in favor of more risk-driven assets after the White House said it had reached a trade deal with China.
Easing geopolitical tensions also sapped demand for gold, as a weekend ceasefire between nuclear armed neighbors India and Pakistan appeared to be holding.
Spot gold slid 1.3% to $3,283.04 an ounce, while gold futures for June fell 1.7% to $3,287.90/oz by 20:12 ET (00:12 GMT).
Gold slides as US touts China trade deal Weakness in gold came tracking a spike in Wall Street futures after Treasury Secretary Scott Bessent and Trade Representative Jamieson Greer said that they had reached a trade deal with China during weekend talks in Geneva, Switzerland, although they did not specify any details on the agreement.
Chinese media said that Washington and Beijing will unveil the deal in a joint statement later on Monday.
A trade deal heralds a deescalation in U.S.-China trade tensions, which rose substantially in the past month after Washington and Beijing engaged in a bitter tariff exchange. Trump slapped China with 145% trade tariffs, to which Beijing retaliated with a 125% levy.
Trump had flagged the potential to lower trade tariffs on China last week, stating that he could bring them down to 80% if weekend talks in Geneva went well.
3rd party Ad. Not an offer or recommendation by Investing.com. See disclosure here or remove ads. The prospect of a U.S.-China deescalation sapped demand for gold, which had benefited greatly from heightened safe haven flows in the past month. This had seen gold reach a record high of $3,500/oz.
Bullion was also pressured by a spike in the dollar, with the dollar index rising nearly 0.3% after the White House’s announcement.
Strength in the dollar weighed on broader precious metal prices. Platinum futures fell 0.2% to $1,000.50/oz, while silver futures fell 0.5% to $32.758/oz.
Industrial metals, specifically copper, outperformed on the prospect of fewer economic headwinds for top importer China. Benchmark copper futures on the London Metal Exchange rose 0.4% to $9,483.60 a ton, while U.S. copper futures rose 0.5% to $4.6755 a pound.
Still, markets remained on edge over the details of the Sino-U.S. trade deal, which will be released later on Monday.
Easing Indo-Pak tensions dent haven demand Gold was also pressured by softer haven demand in the face of easing tensions between India and Pakistan, as a U.S.-brokered ceasefire signed over the weekend now appeared to be holding.
While both New Delhi and Islamabad had initially accused each other of violating the ceasefire on Saturday, military action in the Kashmir region and along the Indo-Pak border appeared to be tapering off, at least over the past 36 hours.
Focus was now on the U.S.’ offer to mediate over the disputed territory of Kashmir- an offer that was welcomed by Pakistan but not acknowledged by India.
