Gold prices fell on Wednesday as easing U.S.-China trade tensions reduced demand for the precious metal, while markets awaited fresh inflation data to gauge the Federal Reserve’s next moves. Spot gold dropped 0.4% to $3,234.32 an ounce at 0231 GMT, while U.S. gold futures slipped 0.3% to $3,237.00.
“Positive developments in U.S. trade policy are diminishing gold’s appeal in the short term,” said Kyle Rodda, financial market analyst at Capital.com. “If trade negotiations continue to progress, gold could see further declines, with $3,200 serving as a key support level.”
The U.S. recently announced a reduction in tariffs on low-value shipments from China to 30%, a move designed to ease tensions between the two largest global economies. On Monday, President Donald Trump confirmed that tariffs on Chinese imports will not return to 145% after the 90-day pause, expressing confidence in a deal between Washington and Beijing.
Meanwhile, the U.S. Department of Labor reported a 0.2% increase in the consumer price index (CPI) for April, falling short of the expected 0.3% rise. Traders are now focusing on the upcoming Producer Price Index (PPI) data, due Thursday, to assess the potential path of interest rate cuts by the Federal Reserve. The market anticipates a 53-basis-point reduction in rates this year, beginning in September.
Gold, often seen as a hedge against inflation, performs well in low-interest-rate environments. Trump has continued to urge the Fed to lower rates, citing falling prices for gas, groceries, and other goods.
Spot silver fell 0.8% to $32.63 an ounce, platinum remained steady at $987.85, and palladium dropped 0.7% to $950.18.
