Gold prices experienced a decline on Monday following positive developments in U.S.-China trade talks, which eased market concerns and shifted investor focus away from safe-haven assets toward riskier investments.
In Dubai, gold rates saw significant drops, with 24-carat gold falling AED4.5 to AED396.25, and 22-carat gold losing AED4.25 to AED367. Similarly, 21-carat gold dropped AED4 to AED352, and 18-carat gold decreased by AED3.5 to AED301.5.
Globally, spot gold fell by 1.34% to $3,281.59, while U.S. gold futures dropped 1.75% to $3,285.49. The U.S. dollar index rose by 0.22% to 100.56, as progress in U.S.-China trade negotiations weighed on gold prices.
U.S.-China Trade Talks End on Positive Note
Gold prices dropped as U.S. and Chinese officials concluded their trade talks on a positive note. U.S. officials indicated a “deal” to reduce the U.S. trade deficit, while Chinese officials reported reaching an “important consensus.”
Vijay Valecha, Chief Investment Officer at Century Financial, noted that although gold had closed higher on Friday, the rally was short-lived. “Gold closed in the green on Friday, up 0.6 percent. However, the rally was short-lived as prices fell during the Asian session on Monday, with the optimism surrounding the U.S.-China trade deal reducing demand for safe-haven assets,” he said.
The trade war between the U.S. and China, triggered by tit-for-tat tariffs, had previously raised fears of a global recession, which drove gold prices to record highs. However, the latest trade developments are cooling those concerns.
Temporary Tariff Reductions
According to a joint statement released in Geneva, both the U.S. and China agreed to temporarily lower tariffs on each other’s products. This move aims to reduce trade tensions and provide both countries with three more months to resolve their differences.
Investor Focus Shifts to U.S. Inflation Data
As gold prices fell, traders turned their attention to upcoming economic data. U.S. inflation data, set to be released on Tuesday, is expected to provide additional insight into the Federal Reserve’s monetary policy decisions.
With trade tensions easing, gold prices are expected to decline in the short term as the U.S. dollar strengthens and geopolitical risks subside. Additionally, a decrease in tensions between India and Pakistan has further dampened demand for gold as a safe-haven asset.
Other Precious Metals
While gold prices fell, other precious metals saw positive movement. Spot silver gained 0.22%, reaching $32.77, while platinum rose by 0.36% to $998.53. Palladium also saw an increase, gaining close to 0.50% to reach $980.52.
