Gold prices fell nearly 3% to $3,230 an ounce on Monday, hitting their lowest level in about a month, as improved investor sentiment and reduced demand for safe-haven assets followed news of a major tariff rollback by the US and China.
Gold prices sink by about 3%
After high-level trade negotiations in Switzerland over the weekend, the US announced it would cut tariffs on Chinese goods from 145% to 30%, while China will lower levies on US imports from 125% to 10%, both for a 90-day period. The move represents a significant de-escalation in the trade war and signals a mutual willingness to pursue compromise over continued confrontation, easing fears of a prolonged global economic slowdown. Market optimism was further supported by a fragile but holding ceasefire between India and Pakistan, which continues to hold despite ongoing accusations of violations by both sides, lowering geopolitical risks and further dampening appetite for gold.
Pressure from a stronger US dollar
Meanwhile, the non-yielding metal faced additional pressure from a stronger US dollar, which surged to multi-week highs on the back of the tariff truce and resilient US economic data. Moreover, last week's Federal Reserve comments added to gold's bearish tone, as Chair Powell cautioned about persistent risks to inflation and the labor market but rejected the idea of preemptive rate cuts to counter trade-related uncertainty, signaling that monetary policy would remain restrictive for now. Investors are now awaiting key US inflation and retail sales data later this week for fresh clues on the Fed’s policy trajectory and the broader economic impact of the easing trade tensions.
