Gold Retreats as Investors Shift Focus Amid Easing US-China Tensions

Reuters and other financial data sources confirm that gold prices dropped sharply in early trading on April 28, 2025, as easing US-China trade tensions encouraged investors to move away from safe-haven assets.

Spot gold traded at $3,272.89 per ounce, down over 1% from last week’s close and well below the recent record high of $3,500.05 set on April 22. US gold futures also softened, settling near $3,283.70 per ounce.

The market’s mood shifted as the White House signaled a willingness to reduce tariffs, and China exempted some US imports from high duties. This development improved risk appetite, prompting a rotation out of gold and into equities.

The S&P 500 index rose 2.5% last week, while the Vanguard S&P 500 ETF received $832.8 million in inflows. In contrast, the SPDR Gold Trust, the largest gold ETF, saw $1.2 billion in outflows as traders repositioned for a less volatile environment.

The US dollar strengthened by 0.3% against a basket of major currencies, making gold more expensive for buyers using other currencies and adding downward pressure to bullion prices.

Analysts note that gold typically thrives during periods of uncertainty and low interest rates. However, the current improvement in risk sentiment and the stronger dollar have reduced the urgency for investors to hold gold.

Gold Prices Under Pressure Amid Shifting Market

Technical analysis shows gold testing critical support near $3,260. If prices close below this level, a further drop toward $3,200 or even $2,975 is possible.

The daily chart reveals a potential breakdown from a rising channel, with the 14-day Relative Strength Index pointing lower but still above the midline. This suggests some buyers may emerge if prices fall further, but the immediate trend remains under pressure.

Despite the pullback, gold remains up over 25% for the year, reflecting the strong rally that peaked last week. Market watchers see this correction as a response to shifting fundamentals rather than a reversal of the broader uptrend.

JP Morgan forecasts gold could average $3,675 per ounce in the fourth quarter and possibly surpass $4,000 next year, citing ongoing central bank and investor demand.

However, a sharp drop in central bank buying or unexpectedly strong US economic growth could pose risks to this outlook.

Physical demand in Asia, particularly in India and China, remains steady, but speculative interest has cooled.

The China Gold Association reported a 6% decline in gold consumption in the first quarter, though ETF holdings in China surged over 300% year-on-year. As the week progresses, traders will watch US economic data closely, especially GDP and employment figures.

These reports could influence the Federal Reserve’s next moves and gold’s direction. For now, gold’s retreat reflects a pragmatic shift by investors responding to changing global signals and a temporary reduction in geopolitical risk.

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