Dollar surge sinks gold prices amid US‑China trade talks boost
Gold prices have dropped by $100 at the beginning of the week, marking the biggest daily decline in six months. The reasons include the strengthening of the dollar and positive sentiments following weekend trade talks between the US and China.
At the start of the week, gold prices fell by $100, marking the largest daily drop in six months.
Gold prices down
According to goldprice.org, the value of an ounce of gold is currently around $3,227, reflecting a decrease of over 3% compared to prices before the weekend.
This decline is linked to the strengthening of the dollar. The last time such high dollar rates were recorded was in mid-April.
In global markets, investors' attitudes toward risk have improved after trade negotiations between Washington and Beijing took place on Saturday and Sunday in Geneva.
"An important consensus reached"
Chinese Vice Premier He Lifeng, who led Beijing's delegation during the trade talks with the US Treasury Secretary, stated that an important consensus was reached. A consultative mechanism was announced, alongside maintaining regular contact.
The Chinese Vice Premier emphasized that the dialogue was conducted on equal terms and announced that, as a result of the talks, the global economy would receive "a stabilizing" and reassuring boost. He stated that Beijing is ready to intensify cooperation with the US.
Chinese Vice Minister of Commerce Li Chenggang, in turn, emphasized that the agreement would benefit his country's development and announced that when a formal statement is published, it will contain good news for the world.
"As we say back in China, if the dishes are delicious, then timing is not a matter" said Li Chenggang.
US Treasury Secretary Scott Bessent also assessed that significant progress was made during the talks. He announced that additional details would be released on Monday.
The purpose of the ongoing talks in Switzerland is to de-escalate the trade war between the US and China.
After taking office in January, President Donald Trump raised tariffs on Chinese imports to 145%, prompting China to respond with its own tariffs of 125% on American goods.
These actions effectively disrupted trade between the world's largest economies, while simultaneously increasing the likelihood of a global economic crisis.
Groundbreaking US decision towards China
For now, markets are treating headlines about the US-China trade talks with cautious optimism, but vague indications of progress in the negotiations are not enough. Investors want tangible evidence, either with tariff rollbacks, timelines, or formal agreements from both sides, analysts point out.
"While we remain skeptical that anything of substance could be agreed upon after only two days of talks, it’s clear that both sides are looking to de-escalate the situation," writes Win Thin, Global Head of Market Strategy at Brown Brothers Harriman & Co, in a market note.
The US plans to temporarily reduce tariffs on Chinese goods to 30% for a period of 90 days.
