Gold prices saw a notable decline on Wednesday, retreating by 1.2 percent to $3,388.67 per ounce, following a strong previous session. The dip in gold prices was attributed to waning optimism surrounding U.S.-China trade talks, which lowered demand for safe-haven assets. Investors are also focusing on the Federal Reserve’s policy meeting scheduled later in the day.
Gold Prices in Dubai Increase
In contrast to the global trend, gold rates in Dubai saw an uptick. The price of 24-carat gold rose by AED 2.25, reaching AED 409.00 per gram. Similarly, 22-carat gold increased by AED 2.00, bringing its value to AED 378.50, while 21-carat gold climbed by AED 2.00 to AED 363.00. Additionally, 18-carat gold gained AED 1.75, reaching AED 311.25.
Global Gold Price Movement
As of 02:25 GMT, spot gold dropped 1.2 percent to $3,388.67 per ounce, after a surge of nearly 3 percent in the previous session. U.S. gold futures also experienced a decline, falling by 0.7 percent to $3,397.70 per ounce. At the time of reporting, spot gold was trading at $3,384.86, and U.S. futures at $3,385.32.
Ilya Spivak, head of global macro at Tastylive, explained, “Gold seems to be pulling back amid a broad-based ‘risk-on’ move across markets. This is a pro-cyclical configuration that could reflect optimism surrounding U.S.-China trade talks.”
U.S.-China Trade Talks Make Progress
U.S. Treasury Secretary Scott Bessent and chief trade negotiator Jamieson Greer are set to meet with China’s top economic official He Lifeng in Switzerland this weekend to discuss trade matters. Last month, both nations imposed tit-for-tat tariffs, escalating a trade war that raised concerns over a global recession. This development was received positively by Asian traders on Wednesday, contributing to a decrease in safe-haven flows and diminishing the demand for gold as a traditional store of value. The U.S. Dollar strengthened as a result of the renewed optimism over U.S.-China trade negotiations.
Market Shifts Focus to the Federal Reserve
On Tuesday, U.S. President Donald Trump announced that he and senior administration officials will review potential trade deals over the next two weeks. As markets await further clarity, attention is now directed to the Federal Open Market Committee (FOMC) meeting later in the day, where the U.S. central bank is expected to maintain steady interest rates.
Spivak noted that the Fed is likely to maintain flexibility in its approach due to uncertainties surrounding the ongoing trade war’s impact on growth and inflation. Currently, traders are expecting a 0.80 percent reduction in interest rates this year, starting in July.
The market will be keenly watching remarks from Fed Chair Jerome Powell for indications of potential rate cuts and the timing of future monetary policy decisions. If Powell acknowledges resilience in the economy, it could lead to a more hawkish stance from the Fed, countering expectations of a June rate cut and potentially strengthening the U.S. Dollar.
