Gold Plummets 2.7% as US-China Tariff Truce Erodes Safe-Haven Demand

Gold prices crashed to $3,237.04 per ounce Monday, shedding 2.7% in their steepest single-day drop this year, after Washington and Beijing agreed to slash reciprocal tariffs.

The US cut duties on Chinese goods from 145% to 30%, while China reduced its levies from 125% to 10%, sparking a global equity rally that drained bullion’s appeal.

Asian markets led the sell-off, with Indian 24-karat gold plunging ₹6,500 per 10 grams from April’s peak to ₹95,620. Futures on the Multi Commodity Exchange hit ₹92,975, down 3.75% overnight.

Silver bucked the trend, rising 1.34% to $33.00 per ounce as industrial demand optimism offset broader precious metal weakness. Technical indicators turned decisively bearish, with the 100-day EMA breached at $3,215.

The RSI sank to 41.63, while MACD hit -13.96, signaling sustained downward momentum. Seventy-nine percent of moving averages now recommend selling. “Bulls lost their edge below $3,250 resistance,” said Kitco’s Jim Wyckoff, noting critical support at $3,211.

Dollar strength compounded pressures, with the DXY index hitting a one-month high. Higher Treasury yields further discouraged non-interest-bearing gold holdings.

Gold Stalls in Narrow Range as ETF Outflows Ease

ETF outflows moderated slightly to ₹5.82 crore in April, though AUM still grew 87% year-on-year as long-term investors held positions. Market makers see limited near-term upside.

Citi revised its three-month target to $3,150, forecasting range-bound trading between $3,000-$3,300. Traders await US CPI data, expected to show inflation cooling to 3.1%, which could revive rate-cut bets.

“Gold needs geopolitical sparks to reignite,” said KCM’s Tim Waterer, noting truces in both US-China trade and Indo-Pak military tensions. Despite the rout, physical demand emerged in Chennai where sovereign gold rose ₹120 overnight.

Analysts caution that tariff reductions expire in 90 days, leaving room for renewed trade tensions. With 24% year-to-date gains intact, bullion’s core inflation-hedge appeal keeps the door open for rebound plays below $3,200.

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