Gold Nosedives 10% from Record Peak on US-China Optimism
Gold prices extended their retreat in Asian trading on Tuesday, slipping further below the $4,000 per ounce mark breached in the previous session. The decline is largely attributed to signs of easing U.S.-China trade tensions, which have dampened demand for bullion as a safe-haven asset just ahead of a pivotal Federal Reserve meeting.
Spot gold was last down 0.4% at $3,963.6 an ounce by 01:58 ET (05:58 GMT), while U.S. Gold Futures declined 1% to $3,981.59/oz. This marks a sharp correction for the yellow metal, which tumbled over 3% on Monday to an over-two-week low. The recent sell-off has shaved approximately 10% off the record high of $4,381.29/oz reached just one week prior.
Trade Optimism Curbs Bullion Demand
The steep pullback follows reports that negotiators from Washington and Beijing reached a preliminary trade framework during weekend talks in Kuala Lumpur. This development is seen as a major step toward averting a new round of tariffs and sanctions and could potentially pave the way for a major breakthrough when U.S. President Donald Trump meets Chinese President Xi Jinping later this week.
Optimism surrounding a de-escalation of geopolitical risks has reduced the need for gold as a portfolio hedge.
Despite the recent volatility, gold’s long-term trend remains strong. As ING analysts noted,
“Even after (Monday’s) correction, gold is still up more than 50% this year,” a rally underpinned by robust ETF demand and central bank diversification.
They added that the current price pullback might be viewed by some central banks as an “opportunity to increase their holdings.”
Fed Rate Cut Looms, But Upside May Be LimitedInvestor focus is now shifting to the Federal Reserve policy meeting, which begins today and is widely expected to conclude on Wednesday with a 25 basis-point rate cut.
While lower interest rates typically support gold prices by reducing real yields, much of this expected cut appears to be already priced into the market. This consensus suggests that the rate announcement may offer limited near-term upside for the precious metal.
Broader Risk-On Mood Hits Metal Markets The risk-on sentiment pervading the markets has led to a broader decline across precious and industrial metals on Wednesday.
Silver Futures fell 0.6% to $46.49 per ounce. Platinum Futures dropped 1.6% to $1,556.60/oz.
Benchmark Copper Futures on the London Metal Exchange (LME) slipped 0.6% to $10,948.95 a ton, with U.S. Copper Futures declining 0.8% to $5.12 a pound, after LME copper hit a record high of $11,052/ton on Monday. Analysts remain bullish on copper, stating, “With supply disruptions stacking up and trade optimism growing, the outlook for copper is starting to look brighter.”
Published on 29/10/2025
By Nicholas.