Gold retreated again in Asian trading on Monday, extending last week’s decline as improved U.S.–China trade sentiment reduced demand for the metal as a haven asset. Market participants are now turning their attention to the Federal Reserve, which is expected to cut interest rates later this week.
Spot gold fell 1.3% to $4,060.80 an ounce by 00:44 ET (04:44 GMT), while U.S. gold futures dropped 1.6% to $4,072.60. The decline comes after gold ended a nine-week winning streak, during which prices had climbed to record highs above $4,300 per ounce on safe-haven buying driven by geopolitical concerns and expectations of monetary easing.
Trade Breakthrough Dulls Bullion Appeal
The latest slide follows a breakthrough in trade discussions, with U.S. and Chinese officials reaching a preliminary agreement over the weekend on the sidelines of ASEAN meetings in Malaysia. The framework is set to be finalized when Donald Trump and Xi Jinping meet in South Korea later this week, potentially extending the trade truce and paving the way for a broader deal.
“The threat of the 100% tariff has gone away, as has the threat of the Chinese initiating a worldwide export control regime,” said U.S. Treasury official Scott Bessent, suggesting that the risk of renewed trade escalation had eased.
The shift in sentiment has increased investor appetite for risk assets, weighing on demand for gold.
Fed Rate Decision in Focus
Expectations of a Fed rate cut at the October 29 meeting helped limit gold’s losses. Last week’s softer U.S. CPI report strengthened bets on a 25-basis-point cut, with traders also watching for signals of further easing through year-end.
Lower interest rates typically benefit gold by reducing the opportunity cost of holding the metal and pressuring the U.S. dollar, making bullion more attractive to foreign buyers.
Mixed Moves in Metals Markets
The broader precious metals complex also weakened on Monday. Silver futures fell 1.4% to $47.91 per ounce, while platinum futures dipped 0.9% to $1,587.10.
In contrast, copper extended its rally. Benchmark futures on the London Metal Exchange climbed over 1% to reach a record $11,078.00 per ton, while U.S. copper futures rose 1.4% to $5.19 per pound. The move has been fueled by the ongoing shutdown of Freeport-McMoRan Inc.’s Grasberg mine in Indonesia and renewed optimism over a U.S.–China trade truce.