Gold holds below $4,000 as US-China trade talks eases worries

Gold traded just below $4,000 an ounce after a steep selloff, as progress in US-China trade talks sapped demand for havens.

Bullion was slightly weaker near $3,973 on Tuesday, after declining 3.2 percent in the previous session as negotiators from Washington and Beijing said they’d struck agreements on issues including tariffs and export controls. Bullion’s softness came despite a drop in the US dollar after Treasury Secretary Scott Bessent discussed exchange rates with Japan Finance Minister Satsuki Katayama.

Gold has pulled back decisively from a record above $4,380 an ounce last Monday following a blistering rally. It’s still up more than 50 percent this year, with central-bank buying, and the debasement trade — in which investors avoid sovereign debt and currencies to protect themselves from runaway budget deficits — providing support and attracting retail investors.

“While gold continues to make lower lows and futures volumes remain elevated on down days, calling the bottom is a tough ask,” Chris Weston, head of research at Pepperstone Group Ltd., said in a note. “For now, it makes more sense to let others do the hard work and tactically buy a rip after the dip.”

Gold’s rapid rise — and recent retreat — has been a hot topic at the London Bullion Market Association’s precious metals conference in Kyoto. Central-bank demand isn’t as strong as it was, and a deeper correction might be welcomed by professional dealers, John Reade, a market strategist at the World Gold Council, said on Monday at the event — the biggest annual gathering for the industry.

Still, the dip may present opportunity for central banks to ramp up purchases. South Korea’s central bank, which last purchased bullion more than a decade ago, is considering additional purchases over the medium- to long-term, according to an official at the LBMA gathering in Japan.

The US’ pivot toward deal-making with China, alongside a shift in gold-price momentum and a possible end to the US government shutdown, is set to propel the metal lower over the coming weeks, Citigroup Inc. analysts including Max Layton said in a note on Monday. The bank sees bullion falling to $3,800 an ounce in the next three months.

Spot gold fell 0.2 percent to $3,972.69 an ounce at 1:19 p.m. in Singapore. The Bloomberg Dollar Index dipped 0.2 percent.

Silver declined again, after losing 3.7 percent on Monday. Platinum edged lower, while palladium climbed.

In the US, Federal Reserve policymakers are widely expected to lower rates by 25 basis points at their two-day policy meeting, which finishes Wednesday. Lower rates typically benefit bullion, which doesn’t pay interest.

The market is also weighing a list of five finalists to succeed Fed Chair Jerome Powell, who is due to leave his post next May. Treasury Secretary Scott Bessent confirmed the pool has narrowed to current Fed board members Christopher Waller and Michelle Bowman, former Fed Governor Kevin Warsh, White House National Economic Council Director Kevin Hassett and BlackRock Inc. executive Rick Rieder.