Gold loses sparkle after China-US trade truce

Gold loses luster after Sino-US trade truce Keystone-SDA

Gold, like other safe havens, lost some of its lustre on Monday. Investors seemed to have rediscovered their appetite for risk, with China and the United States announcing the suspension for 90 days of part of their punitive customs duties.

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Shortly before 1pm, an ounce of gold continued to plummet, shedding no less than 3.42% to $3,210.29 (CHF2,700). The precious metal, which had reached an all-time high of over $3,500 an ounce on April 22 amid high market volatility fuelled in particular by US President Donald Trump’s trade policy and his disagreements with Jerome Powell, Chairman of the US Federal Reserve, had previously hit a one-week high of $3,260.

Gold had been under pressure since Sunday, when US Treasury Secretary Scott Bessent reported “substantial progress” in trade negotiations between China and the United States. The Chinese side was more measured, referring to “solid sustainable development”. Nevertheless, “the weekend brought some good news”, observed Ipek Ozkardeskaya of Swissquote Bank in a statement.

+ China and US agree to lower tariffs after talks in Geneva

The United States and China announced that they were reducing their reciprocal customs duties to 30% and 10% respectively for 90 days. A joint statement was published on Monday, the day after the end of two days of talks with Beijing. The suspension of punitive tariffs is due to take effect by Wednesday.

The dollar recovers

“We have reached an agreement to take a 90-day break,” US Treasury Secretary Scott Bessent told reporters in Geneva. He spoke of a “shared interest” with China in calming the situation. Deploring a trade deficit of $1,200 billion with Beijing, the United States is asking the Chinese authorities to open up their market more widely to American companies.

The meeting in Cologny, Geneva, was the first face-to-face meeting between senior officials from the two countries since Trump imposed a 145% surtax on goods from China at the beginning of April, in addition to pre-existing customs duties. Beijing, which had promised to fight these surcharges “to the bitter end”, retaliated with 125% customs duties on products imported from the United States.

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Reflecting investors’ renewed appetite for risk, other safe havens, mainly the yen and franc, fell sharply against the dollar. Shortly before 11.40am, the greenback was worth 84.33 centimes, up 1.55%, and 147.89 yen, a jump of 1.76%. The US currency was also appreciating against the euro, with the single currency trading at $1.1126 (-1.12%).

The inverse correlation between gold and the dollar amplified the downward movement in the yellow metal. To complete the trio of negative catalysts for gold, tensions between India and Pakistan have eased and hopes of progress in the conflict between Russia and Ukraine are growing, with both sides apparently moving towards direct negotiations, explained Ricardo Evangelista of ActivTrades. Against this backdrop, gold prices could come under further downward pressure and test the key support level near $3,200.

Translated from French by DeepL/ts

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