Gold extended sharp losses during trading on Monday, falling to a one-week low below the $3,250 level, following news of progress in trade talks between the United States and China.
The announcement of a new tariff-cutting agreement between the United States and China boosted upbeat market sentiment and shifted safe-haven flows away from the precious metal
Gold futures fell more than $120 an ounce as investors pulled back from safe-haven assets.
The United States and China together announced a 90-day temporary suspension of new tariffs, and agreed to temporarily reduce existing tariffs.
Washington has moved to reduce President Trump’s “-for-tat tariffs” on Chinese goods to 10 percent, along with a 20 percent cut related to tariffs linked to fentanyl concerns.
A joint statement, issued after lengthy trade negotiations over the weekend, confirmed that U.S. tariffs on Chinese imports would be cut to 10 percent. “We have heard from both sides that they do not want to disengage,” U.S. Treasury Secretary Scott Besant said, adding that there was now a “good mechanism” in place to ease tensions. According to reports, further talks will take place on key economic and trade issues.
Investors, previously worried that the trade conflict could escalate into a broader crisis threatening global economic activity, appeared to welcome the developments. U.S. stock futures rose, adding to Sunday night’s gains ahead of the announcement. The U.S. dollar also appreciated against a basket of currencies, a move that usually puts pressure on gold prices due to its inverse correlation. China’s Vice Premier He Lifeng confirmed that he will make a joint announcement in Geneva on Monday, boosting market optimism.
Gold falls as trade talks optimism, Powell awaits
The price of an ounce of gold fell to $3,273 on Monday, down almost 1% from the previous session’s level.
The main factors that drive the movement of gold
The main reason for this decline was positive signals on trade talks between the United States and China, which reduced demand for safe-haven assets.
Negotiations between representatives of the two countries concluded over the weekend, and the results give some cause for optimism. Beijing announced plans to start formal talks, while Washington reported progress toward a deal.
US Treasury Secretary Scott Biscent said he would provide more details in a full briefing on Monday. Today’s developments are expected to provoke significant reactions in the market.
On the geopolitical front, the ceasefire between India and Pakistan remained in place until Sunday, despite mutual accusations of violating it shortly after it expired.
Earlier, pressure on gold increased as a result of comments from the Federal Reserve. The council warned of rising inflation and labor market risks. At the same time, Federal Reserve Chairman Jerome Powell has ruled out the possibility of preemptively cutting interest rates in response to tariff threats.
On the four-hour chart, the gold/USD pair formed a consolidation range around 3,322. Today we expect a possible decline to 3,195. After reaching this target, a correction to 3,255 is possible. After this correction is complete, a new wave of decline to the local target at 3,070 may follow. Technically, the MACD indicator confirms this scenario, as its signal line is below zero and decisively indicates a decline.
Traders await the release of US inflation data. Markets are also focused on Federal Reserve Chairman Jerome Powell’s speech on Thursday, looking for possible clues about the Fed’s upcoming rate cut path and the broader economic outlook.
Gold falls as tariffs ease and dollar rises
- Gold prices fell sharply over 5%, losing more than 180 basis points amid renewed hopes of tariff cuts between the United States and China.
- Gold peaked at $3,422.80 an ounce on May 6, before falling sharply, falling back from the two main psychological ranges of $3,400 and $3,300.
- Market anticipation of the possibility of easing trade tensions is likely to be the reason for the decline, putting pressure on safe-haven assets.
Throughout the week, markets have been abuzz with speculation about the possibility of eliminating-for-tat tariffs for 90 days, with US tariffs on Chinese imports expected to fall from 145% to 30%, and China to reduce its tariffs on US goods from 125% to 10% by May 14.
On May 12, 2025, US and Chinese officials officially confirmed the news of tariff relief after two days of high-level negotiations in Geneva, Switzerland.
Meanwhile, the US dollar, tracked by the DXY. Has risen 1.30% since last week, adding to pressure on gold as investors turn to the strong currency amid easing trade tensions.
The Geneva meetings were the first face-to-face discussions between top U.S. and Chinese economic officials since President Trump returned to power and began his global tariff strategy.
US Treasury Secretary Scott Biscent described the talks as productive, stressing the two countries’ commitment to maintaining trade ties: “The high tariffs imposed were like an embargo, and neither side wants that. What we want is trade.”
Hamas said Aidan Alexander, the last surviving American hostage, would be released. The group also acknowledged its plans to negotiate directly with the United States to ensure a ceasefire and the resumption of humanitarian deliveries.
