Gold prices modest pullback comes as optimism builds around renewed US-China trade talks, with risk appetite improving across markets after weeks of tension-driven volatility.
High Level US-China Talks Offer Tentative Relief
Market attention is centred on fresh diplomatic engagement between Washington and Beijing. US Treasury Secretary Scott Bessent confirmed plans to meet Chinese Vice Premier He Lifeng in Malaysia this week in an effort to defuse the latest escalation in the long running trade dispute. The development has tempered haven demand, fuelling a rebound in the US dollar and placing short term pressure on gold.
Shutdown Resolution Hopes Lift Risk Appetite
Adding to the improved sentiment, White House Economic Adviser Kevin Hassett said the US government shutdown could be resolved within days, providing a further boost to risk sensitive assets. The prospect of a reopening bolstered equities and weighed on the safe haven trade, but analysts caution that gold remains underpinned by broader macro uncertainty, particularly ahead of upcoming inflation data and earnings from major US corporations.
Fed Rate Cut Bets Keep Gold’s Appeal Intact
Despite the pullback, gold continues to attract bargain hunters, supported by expectations that the Federal Reserve will cut rates twice more before year end. Dovish Fed pricing has anchored the metal’s long term bullish narrative, with investors continuing to view gold as a “buy on dip” opportunity amid persistent geopolitical and fiscal risks.
Trump Tariff Threat Adds a New Layer of Uncertainty
In a move that reignited trade tensions, President Donald Trump warned late Monday that the US could impose 155% tariffs on Chinese imports starting November 1 if no agreement is reached. While traders largely see the threat as a negotiating tactic, the headline risk underscores the fragile state of global trade relations and may swiftly restore gold’s safe haven bid should talks falter.
Market Outlook: All Eyes on US CPI and Trade Headlines
For now, gold’s trajectory remains tethered to the ebb and flow of US-China developments and investor positioning ahead of Friday’s US Consumer Price Index report. With volatility elevated and policy expectations in flux, traders are advised to stay alert. Any sign of a breakdown in talks or a hotter than expected inflation print could reignite a renewed rush into safe haven assets, setting the stage for gold’s next major move.
Disclaimer: This report is for informational purposes only. It does not constitute investment advice or represent the official views of any central bank or regulatory body.