Gold prices fell in European trading on Monday, extending losses for the second consecutive session and moving toward a two-week low. The metal is also at risk of losing its footing above the key psychological level of $4,000 per ounce amid weaker safe-haven demand as trade tensions between the United States and China continue to ease.
The Federal Reserve’s highly anticipated policy meeting begins Tuesday, with a decision due Wednesday. Markets currently expect a 25-basis-point interest rate cut — the second consecutive reduction in US borrowing costs.
Price Overview
• Gold prices fell 1.4% to $4,053.94 from an opening level of $4,112.53, after touching an intraday high of $4,112.53.
• On Friday, gold slipped 0.35%, resuming its losses after a brief recovery from a two-week low of $4,004.56 per ounce.
• The metal lost 3.3% last week, marking its first weekly decline since August, as profit-taking accelerated from an all-time high of $4,381.73 per ounce.
• That decline ended the longest winning streak since June 2020, which had lasted nine consecutive weeks.
Easing Trade Tensions
On Sunday, senior economic officials from the US and China held key talks to outline a framework for a potential new trade agreement expected to be presented to President Donald Trump and Chinese President Xi Jinping in the coming days.
The two leaders are scheduled to meet Thursday in South Korea — their first encounter since the start of Trump’s second term — in what is expected to be a pivotal moment for bilateral relations, particularly concerning global trade and geopolitical stability in Asia.
Federal Reserve Outlook
The Fed’s two-day policy meeting begins Tuesday, with a decision due Wednesday. Markets widely expect a 25-basis-point rate cut, marking the second straight reduction in US rates.
The accompanying policy statement and remarks from Fed Chair Jerome Powell are expected to provide clearer signals on whether additional rate cuts could follow later this year.
According to CME’s FedWatch tool, markets currently price in a 97% probability of a 25-basis-point cut this week and just 3% odds of no change.
Outlook for Gold
Kyle Rodda, an analyst at Capital.com, said: “The potential trade deal between the US and China came as a surprise and was generally seen as a positive development for markets — though, of course, that’s negative for gold.”
He added: “Market momentum has begun to cool, and sentiment is more neutral now. The key reason gold remains supported is the expectation of continued fiscal and monetary easing in the months ahead. If that persists, gold is likely to maintain its upward trend.”
SPDR Holdings
Holdings in the SPDR Gold Trust — the world’s largest gold-backed exchange-traded fund — fell by 5.44 metric tons on Friday to 1,046.93 metric tons, marking the lowest level since October 16.
