Spot Gold eased from a 2-week high of $3,435 per troy ounce on Wednesday, since optimism over potential US-China trade negotiations pared the metal’s safe haven appeal.
US Treasury Secretary Scott Bessent and US Trade Representative Jamieson Greer are set to meet with Chinese Vice Premier He Lifeng in Switzerland this weekend. Bessent’s recent comments that several trade agreements could be announced soon have also added to the overall optimistic mood.
“Gold seems to be pulling back amid a broad-based “risk on” move across markets … this is a pro-cyclical configuration that might echo optimism amid clues that the U.S. and China have started real trade negotiations,” Ilya Spivak, head of global macro at Tastylive, was quoted as saying by Reuters.
Market focus now sets on the outcome of the Federal Reserve’s policy meeting.
The Fed is widely expected to leave its federal funds rate target range intact at 4.25%-4.50% at its May 6th-7th meeting.
The minutes of the FOMC meeting in March showed that policy makers expected inflation would be pushed higher this year because of the impact of elevated tariffs, though they acknowledged considerable uncertainty over the magnitude and persistence of these effects.
Investors will also be paying close attention to the press conference with Fed Chair Jerome Powell for clues over the timing of any future interest rate cuts.
About 80 basis points of Fed rate cuts by year-end are now priced in, with the first cut likely occurring in July.
Spot Gold was last down 1.18% on the day to trade at $3,390.58 per troy ounce.
Yesterday’s surge in prices came on strong physical demand from China, the world’s largest bullion buyer, following the public holidays.
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