Gold sinks as trade talks, easing tensions impact haven demand

Gold fell as its haven status was impacted by signs of progress in trade talks between the US and China, along with some relief to geopolitical tensions.

Bullion fell as much as 1.8% in early trading in Asia to around $3,265 an ounce, following a weekly gain of 2.6% as investors focused on the outcome of upcoming trade talks between the world’s two largest economies. The dollar strengthened — making gold more expensive for most buyers — after the US and China both reported “substantial progress” following two days of discussions in Switzerland, although neither side immediately announced specific measures.

“We need to see concrete details in the next few sessions and then we can get an idea of how much of a pullback we see in gold,” said Nick Twidale, chief market analyst at AT Global Markets in Sydney, adding that further unwinding of safe haven flows could see prices fall to around $3,100 an ounce. “For anyone shorting gold on the back of better trade deals, the first target to look for will be $3,100.”

While bullion could test the lower end of of its current $3 200 to $3 400 range if there is continued progress in US-China trade talks, “dips to and through $3 200 in gold should be very well supported for an eventual move to fresh record highs,” said Robert Rennie, head of commodity and carbon research at Westpac Banking Corp in Sydney.

Ahead of Monday’s selloff, investors had been scaling back exposure to gold. Hedge funds slashed their bullish wagers on the precious metal to the lowest in more than a year on growing optimism surrounding potential progress in US trade negotiations, according to the latest Commodity Futures Trading Commission data.

Still, concerns about the economic impact of the tariff war unleashed by the new US administration has helped drive gold about 25% higher this year, with prices hitting a record above $3 500 an ounce last month before losing some ground in recent weeks. The precious metal has also seen support from strong central bank buying and speculative Chinese retail activity.

Meanwhile, a ceasefire between India and Pakistan appeared to be holding on Sunday after four days of clashes that brought the two nuclear-armed nations close to a full-blown war. Investors will also be watching as Donald Trump’s effort to secure peace in Ukraine reaches a decisive moment, with Volodymyr Zelenskiy challenging Vladimir Putin to engage in talks this week.

Spot gold was 1.2% lower at $3 286.65 an ounce as of 7:41 a.m. in Singapore. The Bloomberg Dollar Spot Index was up 0.1%. Silver eased, palladium advanced and platinum was little changed.

© 2025 Bloomberg

Follow Moneyweb’s in-depth finance and business news on WhatsApp here.