Gold prices found support above the US$4,000 mark during Wednesday's Asian trade, stabilising after their steepest single-day drop in 12 years as traders stepped back from heavy profit-taking and awaited further developments in the United States-China trade discussions.
By 4:05 pm AEDT (5:05 am GMT), spot gold was trading 0.3% higher at US$4,139.83 per ounce, recovering from earlier losses that briefly pushed the metal towards key technical support near $4,000.
Gold is attempting to regain footing after Tuesday’s sharp 5.3% plunge, which marked its steepest one-day percentage drop since June 2013 and the largest single-day dollar loss on record.
The U.S. dollar softened on Wednesday after a strong rebound the previous day, helping gold claw back some losses.
Traders shifted focus to upcoming U.S.-China trade talks and broader geopolitical developments for direction.
U.S. President Donald Trump earlier signalled optimism about reaching “a fair deal” with Chinese President Xi Jinping during their upcoming meeting in South Korea next week.
Meanwhile, markets are also watching talks between U.S. Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng in Malaysia aimed at easing recent trade frictions.
The sharp sell-off in gold earlier this week coincided with a surge in the U.S. dollar and a rally in USD/JPY, driven by weakness in the Japanese yen after Sanae Takaichi was sworn in as Japan’s new Prime Minister.
Markets anticipate Takaichi will usher in a more expansionary economic era, which weighed on the yen and boosted dollar demand.
Looking ahead, traders remain focused on new signals from the U.S.-China trade front, with sentiment also shaped by ongoing uncertainty stemming from the U.S. government shutdown and the postponement of the Trump-Putin summit.
