Gold prices extended their decline on Wednesday, dropping to near $3,315 during the early Asian session. The precious metal edged lower amid improved global market sentiment, as easing trade tensions and reduced demand for safe-haven assets took center stage. Traders are now turning their attention to key US economic data, including the ADP Employment Change, the Personal Consumption Expenditures (PCE) Price Index, and flash Q1 Gross Domestic Product (GDP) figures, which are set to be released later in the day.
In a move to soften the impact of automotive tariffs, US President Donald Trump is reportedly working to prevent duties on foreign-made cars from accumulating with other tariffs. Additionally, he aims to ease levies on foreign parts used in car manufacturing. US Treasury Secretary Scott Bessent also highlighted that major trade partners have made “very good” offers to avoid US tariffs. Moreover, recent exemptions granted to certain US goods from retaliatory tariffs indicate a willingness to de-escalate trade tensions.
As trade tensions ease, the demand for gold—a traditional safe-haven asset—has waned. Jateen Trivedi, VP Research Analyst at LKP Securities, noted, “The easing came amid the US opening tariff talks with multiple nations and growing expectations of a potential China-US trade agreement. Additionally, optimism surrounding a possible Russia-Ukraine peace deal further reduced the safe-haven demand for gold.”
US Economic Data to Shape Market Sentiment
Investor focus remains on upcoming US economic reports, which are expected to provide fresh insights into the health of the US economy. Key data, including the ADP Employment Change, the PCE Price Index, and Q1 GDP figures, will be released later on Wednesday. On Friday, attention will shift to the US employment report for April, with expectations of 130,000 new jobs and an unchanged unemployment rate of 4.2%.
Should these reports fall short of expectations, the US dollar could weaken, potentially boosting gold prices in the near term.
