Spot Gold rebounded from yesterday’s 1 1/2-week low of $3,207.79 on Tuesday, recouping part of Monday’s steep loss, on likely bargain buying.
The yellow metal plummeted 2.7% on Monday, as a breakthrough in US-China trade relations bolstered investor risk appetite and dampened demand for safe-haven assets.
During high-profile trade talks in Switzerland over the weekend, US and Chinese officials agreed to significantly lower tariffs, which alleviated global trade tensions.
US tariffs on Chinese imports will be reduced from 145% to 30%, while China’s levies on US imports will be cut from 125% to 10%.
The two sides have also agreed on a 90-day pause on measures.
China has also agreed to remove export countermeasures implemented after April 2nd, namely restrictions on rare-earth minerals and magnets.
However, concerns about US growth remain, as tariffs will still be dramatically higher.
Market players now awaited the US CPI inflation data, due out later in the day, which may provide further clues over the Federal Reserve’s monetary policy path.
Annual headline consumer inflation in the US probably steadied at 2.4% in April, according to market consensus.
And, annual core CPI inflation probably steadied at 2.8% in April.
The easing of trade tensions is expected to alleviate upward pressure on US inflation expectations, a potential shift that adds to the case for the Federal Reserve to lower interest rates.
About 55 basis points of Fed rate cuts by year-end are now priced in, compared to 85 bps a week ago.
Spot Gold was last up 0.79% on the day to trade at $3,260.68 per troy ounce.
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