Gold prices fall after US-China trade deal; Investors' risk appetite soars
Gold prices fell sharply in today's trading session as the US and China made important progress in trade negotiations, easing concerns and boosting money flows into riskier assets such as stocks and cryptocurrencies.
According to the latest market data, spot gold fell below the $2,300/ounce mark, its lowest level in two weeks, after news of a preliminary agreement between the world's two largest economies was announced.
Risk sentiment returns — capital flows out of safe-haven assets
The trade deal is expected to ease geopolitical tensions and ease concerns about escalating tariffs, which have sent investors flocking to safe-haven assets such as gold and the US dollar.
Meanwhile, major stock indexes such as the S&P 500, Nasdaq and Dow Jones all recorded strong gains, as investors welcomed the positive outlook from the easing of trade tensions. Meanwhile, Bitcoin also benefited, surpassing the $105,000 mark after a volatile week.
Analysts: Short-term gold trend may continue to be under pressure
According to experts at JPMorgan and Kitco, gold's loss of appeal in the short term is understandable as the market's risk appetite has improved significantly. However, they also warned that inflation risks, unpredictable monetary policies from central banks and geopolitical situations could still cause gold to turn around in the near future.
"Gold prices are adjusting to market sentiment, but any negative signals from Fed meetings or instability in the Middle East could bring gold back to its role as a safe haven," said a strategist at Citi.
Next in focus: Federal Reserve interest rate decision
Investors are now looking ahead to the Federal Reserve's upcoming monetary policy meeting, where signals on the direction of interest rates will have a major impact on gold prices. If the Fed continues to maintain its hawkish policy, gold could come under further pressure. Conversely, if there are signs of easing, the precious metal could rebound.