Gold prices fell on Monday as optimism surrounding a potential easing of U.S.-China trade tensions reduced investor appetite for safe-haven assets. Stronger-than-expected U.S. employment data also weighed on expectations for a near-term interest rate cut by the Federal Reserve.
As of 02:14 GMT, spot gold was down 0.4% at $3,298.12 per ounce, while U.S. gold futures fell 0.9% to $3,317.40.
The decline in gold prices comes ahead of a key meeting between senior U.S. officials and their Chinese counterparts in London, where they are expected to discuss pathways to resolve the long-standing trade dispute between the world’s two largest economies. The outcome of the talks remains uncertain, keeping global markets on edge.
“Short-term traders are reluctant to take aggressive long positions before the results of the U.S.-China negotiations are clear,” said Kelvin Wong, senior market analyst for Asia-Pacific at OANDA.
Wong added that while tariffs are unlikely to be removed altogether, negotiations may help reduce tensions. He also warned that the high cost of doing business in the U.S., coupled with a widening federal budget deficit, could intensify inflationary pressures through a feedback loop.
Last Friday, the U.S. Labor Department reported that the economy added 139,000 jobs in May, surpassing analysts’ expectations. The unemployment rate remained unchanged at 4.2%, while wage growth also exceeded forecasts—further reducing the likelihood of an imminent rate cut.
Following the labor market report, investors scaled back expectations for monetary easing. Markets now anticipate the next rate cut could come in October, pending further economic data. Attention is now turning to the U.S. Consumer Price Index (CPI) report due Wednesday, which could provide more clarity on the Fed’s next move.
Meanwhile, President Donald Trump said he will soon announce his choice for the next Federal Reserve Chair, noting that “a good Fed Chair” would support lower interest rates.
In geopolitics, a Trump administration executive order barring citizens from 12 countries from entering the U.S. is set to take effect Monday, potentially heightening global tensions.
Gold, which offers no yield, typically benefits during periods of economic and geopolitical uncertainty, and in low interest rate environments.
Among other precious metals, spot silver was flat at $35.97 per ounce. Platinum fell 0.5% to $1,163.64, while palladium held steady at $1,046.18.
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