Gold prices faced a downturn on Monday, reversing a three-day rally that had driven the precious metal to an all-time high of $3,245 on Friday.
The retreat comes as market sentiment improves, with risk appetite returning in the wake of a positive shift in US-China trade tensions and a notable rebound in Wall Street on Friday. The easing of safe-haven flows has temporarily alleviated the bullish pressure on gold.
On Friday, China retaliated against the US’s tariff hike to 145% by imposing tariffs of 125% on American goods. However, Beijing indicated it would not escalate the situation further in response to any additional US measures.
Over the weekend, US President Donald Trump floated the idea of imposing a 20% tariff on Chinese semiconductors and the electronics supply chain, down from the previously proposed 145% tariffs. These developments were seen as a step towards de-escalation, boosting market confidence and allowing the US Dollar to recover from 35-month lows.
The rise in the Dollar, coupled with improved risk sentiment, has kept downward pressure on gold prices. Traders are now looking ahead to China’s upcoming trade balance report and speeches from US Federal Reserve officials for further market direction. The easing of tariff concerns on Chinese electronics could also prompt some traders to take profits after the recent surge in gold prices.
