The price of gold was just below $4,000 an ounce after a sharp decline, while progress in trade talks between the US and China reduced demand for havens.
Gold was slightly lower near $3,973 today, after falling 3.2 percent in the previous session, as negotiators from Washington and Beijing announced they had reached agreements on issues including tariffs and export controls. Gold’s weakness came despite a drop in the US dollar after Treasury Secretary Scott Bessent discussed exchange rates with Japanese Finance Minister Satsuki Katayama.
Gold retreated decisively from a record high of $4,380 an ounce last Monday after a strong rally. It’s still up more than 50 percent this year, with central bank buying and devaluation trades — in which investors shun government debt and currencies to hedge against out-of-control budget deficits — providing support and attracting small investors.
– While gold continues to record lower values and futures volumes remain elevated in the down days, it is difficult to predict the bottom – Chris Weston, head of research at Pepperstone Group Ltd., said in a note.
– So far, it is more logical to let others do the hard work and tactically buy the dip after the dip – he added.
The rapid rise in gold prices – and the recent pullback – was a hot topic at the London Bullion Market Association’s precious metals conference in Kyoto. Central bank demand is not as strong as it was, and a deeper correction could be welcomed by professional traders, John Reade, market strategist at the World Gold Council, said at the event – the industry’s largest annual gathering.
However, the decline could provide an opportunity for central banks to increase their purchases. The South Korean central bank, which last bought precious metals more than a decade ago, is considering additional purchases in the medium and long term, according to officials at the LBMA meeting in Japan, reports BHRT.
The U.S. pivot toward a deal with China, along with a shift in gold price momentum and a possible end to the U.S. government shutdown, should lower the price of the metal in the coming weeks, Citigroup Inc. analysts including Max Layton said in a note on Monday. The bank predicts a drop in the price of gold to $3,800 per ounce in the next three months.
Spot gold was down 0.2 percent at $3,972.69 an ounce at 1:19 p.m. in Singapore. The Bloomberg Dollar Index fell 0.2 percent.
Silver fell again, after losing 3.7 percent on Monday. Platinum fell slightly, while palladium rose.
In the US, Federal Reserve policymakers are expected to cut interest rates by 25 basis points at their two-day policy meeting, which ends on Wednesday. Lower interest rates usually use gold, which does not earn interest.
The market is also considering a list of five finalists to succeed Fed Chairman Jerome Powell, who is due to leave office in May next year. Treasury Secretary Scott Bessent confirmed that the number of respondents was narrowed down to current Fed board members Christopher Waller and Michelle Bowman, former Fed governor Kevin Warsh, White House National Economic Council Director Kevin Hassett and BlackRock Inc. CEO. Rick Rieder, reports Bloomberg.
