Having registered its steepest loss since August 2020 on Tuesday, Spot Gold rebounded on Wednesday amid bargain hunting.
Signs of easing US-China trade tensions have somewhat reduced the safe-haven appeal of the precious metal.
US President Donald Trump has said he expects to strike a fair trade deal with Chinese President Xi Jinping at an upcoming meeting in South Korea. Trump said last week the proposed 100% tariff on Chinese imports would not be sustainable.
“Simmering of trade tensions between the U.S. and China was the snowflake which caused the avalanche and reversal of gold’s momentum trade,” StoneX senior analyst Matt Simpson was quoted as saying by Reuters.
“This is simply a technical repositioning on a market that clearly needed a pullback after an extended move above $4,000. I suspect we’ve seen the worst of the day-to-day volatility as dips will still likely be bought.”
Investor focus now sets on the key US CPI inflation report this week.
Annual headline consumer inflation in the US probably picked up to 3.1% in September from 2.9% in August, according to market consensus.
And, annual core CPI inflation probably steadied at 3.1% in September.
Markets are now pricing in about a 99% chance of a 25 basis point Fed rate cut in October and a 97% chance of another 25 bps cut in December.
Lower interest rates tend to reduce the opportunity cost of holding Gold, which pays no interest.
Spot Gold was up 0.35% on the day to trade at $4,139.58 per troy ounce.
Strong central bank buying, US tariff policies, potential rate cuts by the Federal Reserve, robust ETF inflows and geopolitical uncertainty have fueled Gold’s rally to a series of record highs this year. Year-to-date, the yellow metal has surged 57.74%.
TradingPedia.com is a financial media specialized in providing daily news and education covering Forex, equities and commodities. Our academies for traders cover 
