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Highlights
- Gold prices decline for the third consecutive day
- US-China trade dialogue reduces investor fear
- Rate cut expectations grow despite gold pullback
Gold prices saw continued pressure this week, falling for a third straight session, as investor sentiment shifted on encouraging signals surrounding US-China trade discussions. The precious metal traded lower, slipping as much as 0.6% during the session to hover near $US3275 per ounce, reflecting waning demand for traditional safe-haven assets.
Market watchers pointed to reports from state-owned China Central Television, indicating that the United States had reached out to Beijing through multiple communication channels. This development stirred hopes that the world’s two largest economies could restart formal negotiations, easing long-standing tensions that have previously dampened global trade confidence.
Further bolstering market sentiment was word from Washington that the US administration was preparing to roll out an initial wave of trade agreements. These would reportedly scale back certain planned tariffs, further reinforcing expectations of a cooling trade climate.
Despite the geopolitical optimism, economic data from the United States presented a mixed backdrop. The US economy posted a contraction in the first quarter — the first since 2022 — attributed largely to a pre-tariff import rush that distorted the usual trade flows. This dip in output raised concerns over the broader economic outlook and led to speculation around policy response.
Traders responded to the economic weakness by ramping up expectations of monetary support from the Federal Reserve. Market pricing now reflects the likelihood of four quarter-point interest rate cuts by the end of the year, aimed at cushioning any recessionary pressures. Generally, lower interest rates act as a tailwind for gold, which does not yield interest, making the metal more attractive in low-rate environments.
Nevertheless, the current mood in financial markets seems tilted towards risk-on, at least in the short term, reducing immediate interest in gold as a defensive asset. As of early morning trading in Singapore, spot gold was down 0.5% at $US3273.40 per ounce.
Investors may continue to monitor macroeconomic trends and central bank policy signals for cues. Meanwhile, evolving trade relations could remain a key driver for commodity prices across the board. Broader equity indices like the ASX200 also tend to reflect these global risk shifts, making them critical to track.
For income-focused investors exploring alternatives during periods of market volatility, ASX dividend stocks remain a compelling area to research, as they often provide regular income regardless of short-term commodity movements.
