Safe-Haven Shaken: Gold’s 1% Plunge as US-China Thaw Jolts Markets

Image Source: The Economic Times

Gold prices plunged sharply on Monday, falling over 1% as easing US-China trade tensions drained safe-haven demand and a resurgent dollar added to the pressure. After recently breaching record highs, bullion's run peaked as investors turned to riskier assets on hopes of a trade breakthrough.

Key Highlights:

Gold Falls More Than 1%: Spot gold fell 1.4% to $3,272.89 per ounce, giving up last week's record of $3,500. U.S. gold futures also declined, mirroring a broad retreat in safe-haven demand.
US-China Trade Optimism: The Trump administration indicated a readiness to relax tariff tensions, and China dropped some US imports from sharp tariffs, leading to optimism over trade tensions easing. This change increased risk appetite and diminished the need for gold as a hedge.
Stronger Dollar Presses Down: The US dollar index rose 0.3%, increasing the price of gold for purchasers using other currencies and fueling the sell-off.
Physical Market Impact: Gold discounts in India jumped to a nine-year high as historic prices discouraged purchasers, while Chinese premiums reached a one-year high, encouraging rising shipments to the world's leading bullion user.
Analyst View: Analysts point out that barring any new geopolitical shocks, gold might continue to face pressure. Longer-term structural considerations, however, like central bank diversification, might still be supportive of bullion.