Gold Tumbles as US-China Trade Talk Optimism Saps Haven Demand
Gold fell, snapping a two-day advance, as signs of progress on US-China trade talks curbed demand for havens even as military hostilities between India and Pakistan escalated.
Bullion fell as much as 1.6% after surging nearly 6% in the previous two sessions. Washington and Beijing announced that Treasury Secretary Scott Bessent and US Trade Representative Jamieson Greer will travel to Switzerland to meet with China’s Vice Premier He Lifeng.
The talks are the first since President Donald Trump imposed sweeping tariffs against China, and are raising optimism of a deal between the two biggest economies. However, Beijing said would not sacrifice its principled stance or international fairness to seek any agreement. The dollar climbed against most major currencies.
In South Asia, Pakistan said it shot down five Indian airplanes and took soldiers prisoner in retaliation for Indian military strikes early on Wednesday. The prospect of a war between the nuclear-armed neighbors would typically be positive for gold, although any added haven demand is, at this stage, being canceled out by the trade talks optimism.
Bullion has surged almost 30% this year, with investors seeking refuge amid widespread market chaos unleashed by Trump’s aggressive trade and geopolitical policies. It hit a record above $3,500 an ounce in April, before losing some ground in recent weeks. The ascent has also been driven by speculative demand in China and central-bank purchases.
Spot gold fell 0.9% to $3,399.56 an ounce as of 7:54 a.m. in Singapore. The Bloomberg Dollar Spot Index was up 0.2%, snapping a three-day decline of more than 1%. Silver dropped, while platinum and palladium edged higher.
The Federal Reserve is due to make an interest-rate decision later on Wednesday, with policymakers expected to stay on hold, despite Trump’s repeated criticism of Chair Jerome Powell for not cutting. Officials have largely emphasized a need to wait and see how trade policies implemented last month affect the economy. Lower borrowing costs tend to benefit gold, as it doesn’t pay interest.
Source : Bloomberg
