Gold Plunges to Five-Week Low as U.S.-China Trade Deal Dampens Safe-Haven Appeal

Gold prices tumbled to a five-week low on Thursday as easing global trade tensions reduced demand for safe-haven assets. Spot gold traded at $3,129.16, down 1.50% with a loss of 47.51 points.

This marks a nearly 10% correction from its April record high of $3,500.05. The precious metal’s decline accelerated after the United States and China agreed to significantly reduce tariffs.

Both nations started a 90-day truce to finalize a comprehensive trade agreement. The US lowered duties from 145% to 30%, while China cut tariffs from 125% to 10%.

This diplomatic breakthrough shifted investor sentiment away from protective assets toward riskier investments. Brian Lan, managing director at GoldSilver Central, noted that “$3,150 represents a significant support level.”

He warned that if this level breaks, “$3,100 appears to be the next target.” The daily chart confirms the bearish outlook with multiple red candles forming a distinct downward pattern.

Gold has now broken below several key moving averages, including the 50-day line. Prices have fallen through the cloud support on the Ichimoku indicator, suggesting continued weakness ahead.

The broader geopolitical landscape further dampened gold’s appeal. President Trump‘s diplomatic efforts with Asian partners coincided with normalizing India-Pakistan relations.

Markets also anticipate Trump might relax sanctions on Syria during his upcoming Middle East visit. However, gold still finds moderate support from monetary policy expectations.

Markets currently price in approximately 53 basis points of Federal Reserve rate cuts this year. The probability of a September rate reduction stands at about 50%, according to CME Group data.

Recent inflation figures showed the US Consumer Price Index rose 2.3% year-over-year in April. This reading came in below the forecast of 2.4%. Such moderate inflation keeps rate cut expectations alive, potentially limiting gold’s downside.

UBS strategist Joni Teves maintains a constructive long-term outlook despite current weakness. “Short-term consolidation could drag gold to $3,100 before rebounding to $3,500 by end-2025,” she predicted. Trading volumes reached exceptional levels in April, averaging $441 billion daily.

Investors now await US Producer Price Index data and Federal Reserve Chair Powell’s speech later today. These events may determine whether the correction accelerates or support emerges at current levels.

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