On Monday, during the Asian early trading session, international gold prices fell sharply as market risk sentiment quickly intensified, prompting investors to withdraw from safe-haven assets. The White House announced a trade agreement with China, and eased tensions between India and Pakistan, further reducing the appeal of gold as a safe haven.
As of 00:12 Beijing time on Tuesday, spot gold decreased by 1.3%, priced at $3,283.04 per ounce; June delivery gold futures contracts fell even more, by 1.7%, to $3,287.90 per ounce, continuing the trend of a high-level pullback.
The immediate trigger for the weakening gold price was positive news from the high-level trade talks between China and the US held in Geneva, Switzerland. According to US Treasury Secretary Scott Bessent and Trade Representative Jamieson Greer, a trade agreement has been reached with China. Although the specific contents are yet to be disclosed, the market interpreted this as a significant easing of US-China tensions, spurring investor interest in risk assets.
Following the announcement, US stock futures surged across the board, driving funds from safe-haven assets to the stock market. Additionally, US President Trump stated that if the talks progress smoothly, he would consider reducing tariffs on Chinese trade from 145% to 80%, further fueling market optimism.
Previously, due to safe-haven sentiment, gold had reached a historic high of $3,500 per ounce, but with the US-China reconciliation, its value as a safe haven has been undermined.
Meanwhile, positive signals also emerged on the geopolitical front. The ceasefire agreement reached between India and Pakistan, mediated by the US, is currently being largely implemented. Despite some isolated accusations, there have been no significant military conflicts in the Kashmir region over the past 36 hours. This situation has also weakened the demand for gold's safety.
The strength of the US dollar further exacerbated the pressure on gold. Driven by the US-China trade news, the US dollar index rose by 0.3%, increasing holding costs for non-dollar gold holders. Chris Weston, head of research at Pepperstone, noted that the US dollar bulls still have market dominance, which is unfavorable for a short-term gold price rebound.
The overall precious metals sector is under pressure, with platinum futures down by 0.2% to $1,000.50 per ounce and silver futures down by 0.5% to $32.758.
However, in the industrial metals sector, copper prices rose in defiance of the trend due to optimistic expectations from China's improved economic outlook. Benchmark copper futures on the London Metal Exchange rose by 0.4% to $9,483.60 per ton, and US copper futures increased by 0.5% to $4.6755 per pound. Investors are awaiting more details of the US-China agreement to assess its long-term impact on the commodity market.
Overall, gold is evidently under short-term pressure due to multiple adverse factors, with market focus shifting from safe-haven logic to macroeconomic data and policy expectations.
