Gold prices slipped below $3,250 on Monday, pressured by renewed optimism surrounding a potential US-China trade agreement that tempered investor demand for safe-haven assets. The decline marked one of the sharpest daily drops in recent weeks, reflecting a broader shift in market sentiment.
Investors grew more confident about a resolution to the long-standing trade tensions after reports indicated meaningful progress in bilateral talks. That optimism triggered a move away from defensive plays like gold and into riskier assets such as equities, weighing on the XAU/USD pair.
Analysts noted that while gold had recently benefited from uncertainty around global trade and monetary policy, the metal’s rally stalled as “risk appetite returned and fears eased,” according to one strategist. The dollar remained firm, further pressuring gold prices by reducing its appeal for holders of other currencies.
The pullback also followed a lack of fresh catalysts to support the recent surge in precious metals. With real yields stabilizing and volatility retreating, gold’s role as a hedge has temporarily weakened, leaving it vulnerable to further corrections if geopolitical risks continue to subside.
Still, some investors remain cautious, pointing out that the trade deal is not finalized and unexpected setbacks could quickly restore safe-haven demand. Central bank activity and inflation trends also remain key variables that could shift gold’s trajectory in the coming weeks.
For now, gold is likely to stay under pressure as long as hopes for a trade breakthrough hold and broader risk sentiment stays positive. Traders will keep a close watch on any official announcements from Washington or Beijing that could either confirm or disrupt the current momentum.
