Gold prices fell in European trading on Tuesday, deepening losses for the third consecutive session and hitting a three-week low, as open selling positions accelerated and investors moved away from safe-haven assets amid easing trade tensions between the United States and China.
Later today, the Federal Reserve begins its highly anticipated monetary policy meeting, with decisions due Wednesday. Markets broadly expect a 25-basis-point rate cut — the second consecutive reduction in US interest rates.
Price Overview
• Gold prices fell more than 2.0% to $3,901.35 per ounce, the lowest since October 6, down from the opening level of $3,981.50, after hitting an intraday high of $4,019.80.
• On Monday, gold lost 3.2%, its second daily decline in a row, as it fell below the key $4,000-per-ounce level amid optimism surrounding global trade talks.
Trade Developments
On Sunday, senior economic officials from the United States and China held significant discussions to outline a new trade framework expected to be presented to US President Donald Trump and Chinese President Xi Jinping for final approval in the coming days.
Trump and Xi are scheduled to meet Thursday in South Korea — their first encounter of Trump’s second term — in what analysts expect to be a pivotal moment for US–China relations, particularly regarding global trade and geopolitical tensions in Asia.
Trump expressed confidence that a deal could be reached and announced a series of trade and raw-material agreements in Malaysia with four Southeast Asian countries during the first leg of his five-day Asia tour.
Federal Reserve
The Federal Reserve’s policy meeting begins later today, with a decision due Wednesday. Markets expect a 25-basis-point rate cut, marking the second consecutive reduction in benchmark US interest rates.
The post-meeting statement and comments from Fed Chair Jerome Powell are expected to provide clear guidance on whether additional rate cuts are likely before year-end.
US Interest Rates
According to CME’s FedWatch Tool, markets are currently pricing in a 97% probability of a 25-basis-point rate cut at this week’s meeting, with only a 3% chance of no change.
Gold Outlook
• Tim Waterer, chief market analyst at KCM Trade, said: “Buyers who have been watching from the sidelines are beginning to take positions at these price levels. We’re also seeing some softness in the dollar, which gives gold a chance to rebound.”
• Waterer added: “If Trump and Xi hold a productive trade meeting this week, gold could stage a countertrend rise — though that might be offset if the Fed adopts a cautious tone alongside the expected rate cut.”
SPDR Fund
Holdings in the SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell by 8.01 metric tons on Monday — the second consecutive daily decline — bringing the total to 1,038.92 metric tons, the lowest since October 16.
