Gold prices extended their decline on Tuesday, falling 1.6% to $3,920.77 per ounce as easing U.S.-China trade tensions dampened the metal’s safe-haven appeal ahead of the Federal Reserve’s policy meeting. Meanwhile, U.S. gold futures dropped 2.1% to $3,934.51 per ounce.
The metal has now fallen over 10% from last week’s record high of $4,381.29/oz, following a sharp 3% drop on Monday that pushed it to a two-week low.
Easing trade tensions weigh on bullion
The selloff came after Washington and Beijing reached a preliminary trade framework during talks in Kuala Lumpur, aiming to avoid further tariffs and sanctions. Optimism surrounding a possible breakthrough ahead of U.S. President Donald Trump’s meeting with Chinese President Xi Jinping later this week reduced safe-haven buying.
Despite the correction, gold remains up more than 50% year-to-date, driven by strong ETF inflows and sustained central bank purchases, according to ING analysts. They added that some central banks could view the price dip as an opportunity to increase reserves.
Fed meeting in focus
Investors are now watching the Federal Reserve’s two-day meeting, expected to conclude Wednesday with a 25 basis-point rate cut. While lower interest rates typically support gold by reducing real yields, analysts noted that the cut appears largely priced in, suggesting limited short-term upside.
Industrial metals ease
A broader risk-on sentiment weighed on other precious and industrial metals.
- Silver futures declined 0.6% to $46.45/oz
- Platinum fell 2.1% to $1,550.45/oz
- LME Copper dropped 0.6% to $10,952.95 per ton, while U.S. copper futures eased 0.7% to $5.13 per pound
Copper had surged to a record $11,052 per ton on Monday, but traders booked profits as market optimism around trade talks grew.
“With supply disruptions stacking up and trade optimism growing, the outlook for copper is starting to look brighter,” ING analysts added.
