Gold (XAU/USD) is trading in negative territory around $3,245 during the early Asian session on Wednesday, weighed down by improved market sentiment following a tariff agreement between the United States and China. The deal, which has spurred risk appetite in global markets, diminishes the demand for gold as a safe-haven asset. Traders are now turning their attention to remarks from the Federal Reserve later today.
In Geneva, Switzerland, after two days of talks, the US and China agreed to significantly reduce tariffs. The US cut tariffs on Chinese goods to 30% from 145%, while China lowered tariffs on US imports to 10% from 125%. These positive developments have boosted investor sentiment, leading to a sell-off in gold as riskier assets became more attractive.
Additionally, easing geopolitical tensions between India and Pakistan further pressured gold prices. A ceasefire held overnight in Jammu and Kashmir, and across the border towns, following a stern warning from Indian Prime Minister Narendra Modi. Modi declared that India would not tolerate any “nuclear blackmail” and confirmed that military operations against Pakistan were paused, with future actions dependent on Pakistan’s behavior.
Manoj Kumar Jain of Prithvifinmart Commodity Research noted, “Gold and silver saw heavy sell-offs at the start of the week amid the US-China trade deal, with the US Dollar Index and US bond yields spiking as a result. The Indo-Pak ceasefire also diminished safe-haven demand for precious metals.”
However, analysts caution that any renewed escalation in India-Pakistan tensions, along with uncertainty surrounding US President Donald Trump’s tariff policies, could prompt a return to safe-haven flows, potentially driving gold prices higher once again.
