Gold weakens as US-China trade optimism lifts risk sentiment, focus turns to Fed
Gold (XAU/USD) kicks off the week with a negative tone, as improved risk appetite curbed demand for safe-haven assets. At the time of writing, XAU/USD is trading around $4,025, down over 2.0%, extending its retreat from last week’s record high of $4,381 after a wave of profit-taking spurred by progress in trade talks.
Positive trade headlines have boosted market sentiment, with equities extending gains across the globe. Over the weekend, US and Chinese negotiators reportedly reached a preliminary trade framework, setting the stage for further progress ahead of President Donald Trump’s meeting with his Chinese counterpart, Xi Jinping, on Thursday. Trump also signed separate trade framework pacts with Malaysia, Thailand, Vietnam, and Cambodia.
Although markets are in a buoyant mood, a degree of caution prevails as focus shifts squarely to monetary policy. Investors face an event-packed week with key central-bank meetings from the Federal Reserve (Fed), Bank of Canada (BoC), Bank of Japan (BoJ) and the European Central Bank (ECB).
While easing trade tensions has provided some short-term relief, Gold’s downside appears limited as traders remain wary of President Trump’s unpredictable trade stance. Meanwhile, the prolonged US government shutdown and lingering geopolitical and economic uncertainties continue to keep investors cautious.
Source: FXstreet
