Gold prices tumbled beneath the $4,000 per ounce threshold Monday, surrendering gains accumulated during October’s trade war escalation.
The precious metal’s decline reflects diminishing safe-haven appetite as Washington and Beijing edge toward diplomatic resolution, with spot gold trading at $4,005.11 per ounce, down 2.6%, by mid-morning.
The selloff marks a significant reversal from gold’s meteoric ascent to a record $4,381.21 per ounce on October 20. CPM Group’s Jeffrey Christian attributes the retreat to “an unwinding of trade tensions that had taken prices from $3,800 to $4,400 over the course of the first three weeks of October,” combined with technical selling pressure as traders lock in profits.
U.S. and Chinese negotiators unveiled a preliminary framework Sunday to suspend escalating American tariffs and Chinese rare earths export restrictions.
President Trump’s scheduled Thursday meeting with President Xi Jinping signals potential breakthrough momentum, draining urgency from gold’s traditional crisis-hedge positioning.
December gold futures dropped 2.9% to $4,019.00 as markets priced in a 97% probability of a 25-basis-point Federal Reserve rate cut Wednesday.
Lower interest rates typically boost non-yielding gold’s attractiveness, though diplomatic progress currently overshadows monetary policy support.
Market sentiment remains divided on bullion’s trajectory, with some analysts eyeing $5,000 per ounce while Capital Economics slashed its end-2026 forecast to $3,500.
Broader precious metals weakness extended across silver (down 3.8% to $46.75), platinum (off 1.1% to $1,588.86), and palladium (declining 1.3% to $1,409.47), reflecting sector-wide risk appetite returning to traditional assets.
