Spot Gold retreated more than 1% on Monday, as signs of easing US-China trade tensions seemed to have reduced the safe-haven allure of the precious metal.
Top economic officials from US and China over the weekend hashed out the framework of a trade deal for US President Donald Trump and Chinese President Xi Jinping to decide on this week.
“This potential trade deal between the U.S. and China really came out of the blue and has been a positive surprise for the markets broadly. Obviously, the flip side of that is the developments have been negative for gold,” Capital.com analyst Kyle Rodda was quoted as saying by Reuters.
“A lot of the heat has come out of the market now and sentiment is neutralizing. The reason gold is finding so much support is the prospect of loose fiscal and monetary policy going forward. Should that remain the case, gold’s uptrend should hold.”
The latest soft US CPI data added to expectations of further Federal Reserve interest rate cuts by year-end.
Markets are now pricing in about a 97% chance of a 25 basis point Fed rate cut in October and a 95% chance of another 25 bps cut in December.
Spot Gold was down 1.06% on the day to trade at $4,070.47 per troy ounce.
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