Gold prices fell nearly 2% Monday, as hopes of easing U.S.-China trade tensions lifted risk appetite for equities, while investors awaited major central bank meetings this week for rate cut cues.
Spot gold was down 1.3% at $4,059.22 per ounce as of 0837 GMT. Prices hit a record high of $4,381.21 on October 20, buoyed by rising bets for U.S. rate cuts, and geopolitical and economic uncertainties, but have since fallen more than 5%.
U.S. gold futures for December delivery lost 1.6% to $4,072.40.
Asian stocks surged as signs of a detente in China-U.S. trade tensions buoyed risk appetite in a strong start to a week that will be headlined by central bank meetings and megacap earnings.
“A possible trade deal between the U.S. and China is supporting risky assets and weighing on gold, but we should also remember that potentially lower tariffs will allow the Federal Reserve to cut rates further,” UBS analyst Giovanni Staunovo said.
The U.S. and China are set to “come away with” a trade deal, U.S. President Donald Trump said, a day after top officials of the two countries hashed out a framework for Trump and Chinese President Xi Jinping to decide on during their upcoming meeting in South Korea.
Meanwhile, the Fed is expected to cut rates by a quarter percentage point on Wednesday, a view supported by a softer-than-expected September inflation.
With a 25-bps cut already priced in, markets are looking ahead to any forward-looking remarks from Fed Chair Jerome Powell at the meeting.
“Lower real interest rates should still support demand for gold. The market consensus is looking for the Fed to cut rates by 25 basis points, so I don’t expect much movement around the FOMC meeting,” Staunovo added.
Non-yielding gold tends to benefit in a low-interest-rate environment.
Elsewhere, spot silver fell 1.3% to $47.96 per ounce, platinum eased 0.3% to $1,601.75 and palladium gained 0.1% to $1,429.61.
