Gold futures in India dropped sharply on Monday, plunging 3.44% or ₹3,322 to ₹93,196 per 10 grams, as investors trimmed their safe-haven holdings in the wake of two major geopolitical developments: the easing of tensions between India and Pakistan, and a formal breakthrough in U.S.-China trade negotiations.
The decline in gold prices follows a joint statement issued after the U.S.-China economic and trade meeting held in Geneva, where both nations agreed to suspend a large portion of the retaliatory tariffs imposed earlier this year.
As part of the agreement:
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The United States will suspend 24 percentage points of its additional tariffs on Chinese imports set by Executive Orders 14257, 14259, and 14266, while retaining a 10% base rate.
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China will reciprocate by lowering its tariffs on U.S. goods from as high as 125% to 10% for an initial period of 90 days, and will also remove non-tariff countermeasures imposed since April 2, 2025.
The two countries will now engage in structured discussions led by Vice Premier He Lifeng (China), Treasury Secretary Scott Bessent, and U.S. Trade Representative Jamieson Greer, with meetings planned in alternating locations.
This cooling of trade tensions led to a global shift in investor sentiment, driving capital away from gold and into riskier assets such as equities, as hopes for trade normalization grow.
Simultaneously, geopolitical de-escalation in South Asia has further weighed on bullion. India and Pakistan agreed over the weekend to halt cross-border military actions, following a deadly period of escalation. The ceasefire, reaffirmed through hotline-level talks between both DGMOs, has helped stabilize the region and reduce the appeal of gold as a crisis hedge.
Adding further pressure, the U.S. dollar index rose, making gold more expensive for foreign investors and lowering global demand. A stronger dollar typically leads to weaker gold prices.
With diplomatic headwinds softening and trade relations on a tentative recovery path, analysts say gold may remain under downward pressure in the short term — unless inflationary or geopolitical risks resurface sharply.
