Precious metals markets kicked off the week with notable volatility, as gold extended its decline during Monday’s Asian session, pressured by easing trade tensions between the United States and China. The improved sentiment pushed investors toward riskier assets, reducing demand for the metal’s safe-haven appeal.
Spot gold fell about 1.3%, settling near $4,060 per ounce, while U.S. gold futures slipped 1.6% to $4,072. The drop extended losses from late last week after the metal ended a nine-week winning streak, following profit-taking at record highs above $4,300 per ounce.
Selling pressure on gold coincided with signs of progress in U.S. China trade relations after both sides reached a preliminary trade framework during ASEAN meetings in Malaysia. The agreement is expected to be formally signed later this week when U.S. President Donald Trump meets Chinese President Xi Jinping in South Korea, with discussions likely to extend the current truce and lay the foundation for a broader trade accord.
In this context, U.S. Treasury official Scott Bessent stated that the threat of a 100% tariff had been lifted, along with the risk of China imposing global export restrictions developments that eased market concerns and encouraged risk appetite.
Despite the recent pressure, gold continues to find support from expectations that the Federal Reserve will move to cut interest rates in its October 29 meeting. This outlook was reinforced by a weaker-than-expected U.S. CPI report, which strengthened bets for a 25-basis-point rate cut.
Historically, lower interest rates benefit gold by reducing the opportunity cost of holding non-yielding assets and putting downward pressure on the U.S. dollar, making the metal more attractive to foreign investors.
Meanwhile, other precious metals also declined amid the broader risk-on sentiment. Silver futures fell 1.4% to $47.9 per ounce, while platinum futures slipped 0.9% to $1,587 per ounce.
Copper, however, was the standout performer, surging to a record high of $11,078 per ton on the London Metal Exchange, supported by the ongoing shutdown of Freeport’s Grasberg mine in Indonesia since early September and renewed optimism surrounding a potential U.S. China trade truce.
In summary, gold is currently undergoing a healthy corrective phase following a strong rally, as improving market sentiment and easing geopolitical risks weigh on safe haven demand. Nevertheless, expectations of U.S. rate cuts continue to provide a short term support floor, with the $4,000 per ounce level emerging as a critical zone to watch for investors in the near term.
Stay informed about global markets through our previous analyses. and Now, you can also benefit from LDN company services via the LDN Global Markets trading platform.
