Beijing: Gold prices edged lower on Monday as renewed optimism surrounding a possible trade agreement between the United States and China boosted investor confidence, while a stronger U.S. dollar further reduced demand for the precious metal. The dip comes as global markets responded positively to reports that negotiators from both sides had outlined a framework for a long-awaited trade deal, which investors believe could ease global economic uncertainties.
Spot gold fell by around 0.7 percent to $4,082.77 per ounce, while U.S. December gold futures declined nearly 1 percent to $4,095.80. The U.S. dollar, meanwhile, climbed to its highest level in more than two weeks against the Japanese yen, making gold more expensive for holders of other currencies. Analysts noted that the stronger dollar and improving risk appetite have weakened gold’s traditional appeal as a safe-haven asset.
Kyle Rodda, a senior analyst at Capital.com, remarked that the optimism over a U.S.–China trade breakthrough “really came out of the blue” and caused traders to shift away from gold toward riskier assets. He added that while the market remains cautious, the positive sentiment has reduced short-term hedging demand for bullion. The easing tensions between Washington and Beijing have also strengthened equity markets in Asia, further contributing to the outflow from gold-backed funds.
The world’s largest gold-backed exchange-traded fund, the SPDR Gold Trust, reported a decline in holdings from 1,052.37 tons to 1,046.93 tons, a decrease of roughly 0.52 percent. This reflects a broader investor move away from gold in anticipation of improved global trade stability. Traders said that if the trade discussions continue to show progress, gold could face additional pressure in the days ahead.
Attention now turns to the U.S. Federal Reserve, which begins its policy meeting later this week. Markets largely expect the Fed to deliver a quarter-point rate cut following weaker-than-expected inflation data. However, if the central bank signals a more cautious or less dovish stance, gold prices could see further declines. Analysts emphasize that gold tends to perform better in an environment of low interest rates and economic uncertainty, both of which appear to be moderating.
Other precious metals also showed mixed movement. Silver slipped 0.3 percent to $48.42 per ounce, while palladium eased 0.2 percent to $1,426.06. In contrast, platinum saw a marginal gain of 0.1 percent, trading at $1,607.24 per ounce. These fluctuations reflected broader investor adjustments as markets recalibrated expectations following the U.S.–China trade developments.
For emerging markets such as India, where gold remains both a cultural commodity and a financial hedge, the global price decline offers a short-term reprieve for jewelry buyers but poses challenges for investors who rely on bullion as a store of value. A strengthening dollar and rising optimism about global trade could temporarily suppress gold demand in the domestic market, though analysts caution that geopolitical risks and inflationary pressures may still support long-term gold investment.
In the coming days, traders will be closely watching the tone of the Federal Reserve’s announcement and further statements from Washington and Beijing. If trade optimism continues to strengthen and the Fed avoids aggressive monetary easing, gold could remain under pressure. However, any sign of faltering talks or renewed economic uncertainty may quickly restore gold’s safe-haven appeal.