TLDR
- Gold fell 1.4% to near $4,053 per ounce as US-China trade deal progress reduced demand for safe-haven assets
- The precious metal posted its first weekly decline since mid-August, dropping 3.3% last week
- Gold remains up 55% year-to-date despite recent pullback from record high of $4,380 reached last Monday
- Federal Reserve expected to cut rates by 25 basis points this week, which typically benefits gold prices
- World Gold Council strategist suggests $3,500 per ounce would be healthy level for market stability
Gold prices dropped on Monday as the US and China moved closer to finalizing a trade agreement. The precious metal fell as much as 1.4% to approximately $4,053 per ounce.
President Donald Trump is currently in Asia for diplomatic meetings. Both countries indicated they are near completion of a major trade deal. This development reduced investor demand for gold as a safe-haven asset.
The metal had reached a record high just above $4,380 per ounce last Monday. Since then, prices have reversed course. Last week marked gold’s first weekly decline since mid-August, with a 3.3% drop.
Despite the recent pullback, gold has gained 55% this year. Central bank purchases and the debasement trade have supported prices. Investors have been avoiding sovereign debt and currencies due to concerns about budget deficits.
Kyle Rodda, a senior financial market analyst at Capital.com, said the market is returning to more fundamental levels. He noted the US-China trade news was better than expected. This caused an initial reaction in gold prices.
Central Bank Meetings and Rate Decisions
The Federal Reserve is scheduled to announce its policy decision this week. Market forecasts predict a 25 basis point rate cut. The European Central Bank and Bank of Japan are also meeting but are expected to keep rates unchanged.
Lower interest rates typically help gold prices. The metal does not pay interest, making it more attractive when borrowing costs fall. This week’s central bank decisions could influence gold’s direction.
The London Bullion Market Association is holding its conference in Kyoto, Japan. Nearly 1,000 gold traders, brokers, and refiners are attending. Conference attendance has reached a record high.
John Reade, market strategist at the World Gold Council, spoke at the event. He said central bank demand has weakened compared to previous levels. Reade mentioned that conversations at the conference suggested $3,500 per ounce as a healthy price level for the gold market.
Market Performance and Technical Indicators
Spot gold was trading at $4,080.47 per ounce as of Monday afternoon in Singapore. This represents a 0.7% decline for the day. The recent rally had shown signs that the metal became overbought, leading to the current correction.
Silver also declined on Monday. The metal extended last week’s 6.3% drop. The Bloomberg Dollar Index slipped 0.1% during the same trading session.
Platinum and palladium both edged higher on Monday. These industrial metals moved independently of gold’s decline. The precious metals complex showed mixed performance across different assets.
Professional dealers may welcome a deeper price correction. Market participants view the current price levels as elevated. A return to lower levels could stabilize trading conditions.
