Gold prices continued to retreat on Tuesday, extending their sharp sell-off in early European trading as easing US–China trade tensions dampened demand for safe-haven assets ahead of the Federal Reserve’s policy decision.
Spot gold was trading at $3,911.45 an ounce by 08:40 GMT, after dipping below the $4,000 mark in the previous session. Prices have now fallen around 10% from the record high of $4,381.29 reached just a week ago.
The decline follows reports that US and Chinese negotiators reached a preliminary trade framework during weekend talks in Kuala Lumpur, aimed at averting new tariffs and sanctions. The proposal has raised hopes of a breakthrough when President Donald Trump meets China’s President Xi Jinping later this week.
Improved sentiment around trade has seen investors rotate out of defensive assets like gold and into riskier plays, pushing equities higher globally.
It’s a healthy pullback, one that was much needed. Analysts are still forecasting $4,500 by year-end.
Attention now shifts to the Federal Reserve’s two-day meeting, which concludes on Wednesday. Markets widely expect a 25-basis-point rate cut, though investors will be watching for signals on the pace of further easing.