Gold prices extended their decline in Asian trading on Tuesday, slipping further below the $4,000 per ounce threshold as optimism surrounding U.S.–China trade negotiations curbed demand for safe-haven assets ahead of a key Federal Reserve System policy decision.
By 01:58 ET (05:58 GMT), spot gold had fallen 0.4% to $3,963.60 an ounce, while U.S. Gold Futures dropped 1% to $3,981.59/oz. Monday’s sharp 3% slide pushed bullion to its lowest level in more than two weeks, roughly 10% below the all-time high of $4,381.29/oz reached just days earlier.
Trade breakthrough hopes pressure bullion
The selloff followed signs of easing tensions between Washington and Beijing after negotiators reached a draft trade framework during weekend talks in Kuala Lumpur. The plan is aimed at heading off another wave of tariffs and sanctions and could clear the path for a more formal agreement when President Donald Trump meets President Xi Jinping later this week.
The improved tone around trade has weakened gold’s appeal as a hedge against geopolitical risk.
“Even after (Monday’s) correction, gold is still up more than 50% this year, underpinned by strong ETF demand and central bank buying amid diversification,” analysts at ING wrote in a note.
“The recent price pullback could even be seen by some central banks as a chance to increase their holdings,” they added.
Market attention now turns to the Fed’s two-day policy meeting, which begins later today and is widely expected to end with a 25 basis-point rate cut on Wednesday. While lower interest rates typically support gold by reducing real yields, investors believe much of the easing is already priced in, leaving little room for a near-term rally.
Metals broadly lower as sentiment improves
The retreat in gold was mirrored across other precious and base metals amid improving risk appetite.
Silver Futures fell 0.6% to $46.49/oz, while Platinum Futures shed 1.6% to $1,556.60/oz. Benchmark Copper Futures on the London Metal Exchange slipped 0.6% to $10,948.95 a ton, and U.S. Copper Futures were down 0.8% at $5.12 a pound.
On Monday, LME copper touched a record high of $11,052/ton, supported by supply concerns and rising confidence in global trade momentum.
“With supply disruptions stacking up and trade optimism growing, the outlook for copper is starting to look brighter,” analysts said.