Gold Prices Drop as US-China Trade Deal Eases Market Tensions

Gold prices fell sharply in early Asian trading Monday as investor appetite shifted from safe-haven assets to riskier plays following news of a U.S.-China trade deal. Spot gold dropped 1.3% to $3,283.04 per ounce, while June gold futures slipped 1.7% to $3,287.90/oz.

Treasury Secretary Scott Bessent and Trade Representative Jamieson Greer announced on Sunday that the U.S. had reached a trade agreement with China during weekend talks in Geneva. Although details remain scarce, Chinese media reported a joint statement is expected later Monday. The deal signals a potential de-escalation in trade tensions, which surged last month after Washington imposed 145% tariffs on Chinese goods, prompting a 125% retaliation from Beijing. U.S. President Trump recently hinted at lowering tariffs to 80% if negotiations progressed positively.

The prospect of improved U.S.-China relations dampened demand for gold, which had surged to a record $3,500/oz in recent weeks amid geopolitical uncertainty. The dollar also strengthened on the news, with the dollar index up 0.3%, adding further pressure on gold and other precious metals. Platinum futures edged down 0.2% to $1,000.50/oz, and silver fell 0.5% to $32.758/oz.

Conversely, industrial metals like copper gained on optimism over reduced economic headwinds for China. London copper futures rose 0.4% to $9,483.60 per ton, while U.S. copper futures climbed 0.5% to $4.6755 per pound.

Tensions between India and Pakistan also eased following a U.S.-brokered ceasefire, further reducing safe-haven demand. Despite initial reports of violations, calm appeared to return to the Kashmir region, and Pakistan welcomed Washington’s offer to mediate, though India has yet to respond.

Markets await further clarity on the trade deal, which could shape global sentiment moving forward.