Gold prices extended their pullback during Monday's Asian trade, falling below the US$4,100 mark as risk appetite strengthened on renewed optimism over United States-China trade progress and expectations for a Federal Reserve rate cut later this week.
By 4:30 pm AEDT (5:30 am GMT), spot gold slipped 0.8% to US$4,082.12 per ounce.
The metal’s latest decline came as U.S. and Chinese negotiators reached a preliminary consensus on several key trade issues, including export controls, fentanyl regulation, and shipping levies, during two days of talks in Malaysia, easing geopolitical tensions between the world’s two largest economies.
The positive remarks fuelled expectations that President Donald Trump and Chinese President Xi Jinping could finalise a trade deal when they meet in South Korea later this week.
Improved risk sentiment and a weaker U.S. dollar added pressure on gold, even as Treasury yields climbed on easing trade concerns.
Markets are now almost fully pricing in two Federal Reserve rate cuts this year, with a 25 basis point reduction expected at Wednesday’s policy meeting.
Meanwhile, data released Friday by the Bureau of Labor Statistics showed that the U.S. consumer price index rose by 0.3% month-over-month in September, lifting annual inflation from 2.9% to 3%, its highest level since January.
Despite the uptick, the reading came in slightly below expectations for 3.1%, reinforcing the case for near-term monetary easing.
