Gold fell early Wednesday on ebbing haven demand as investors turned to other assets after a lessening of U.S.-China trade tensions and as the broader market rallied.
The U.S. and China – the world’s two largest economies – agreed to massively reduce tariffs on each other’s goods for 90 days, according to a joint statement early this week which followed talks in Switzerland. A positive U.S. inflation report for April on Tuesday also reduced fears about the economy.
The administration said the two countries had reached a “trade deal” after the talks over the weekend in Switzerland and said details would be forthcoming on Monday. The possibility of an end to the trade war between the world’s two biggest economies boosted the broader market but pressured gold, a traditional hedge against geopolitical uncertainty. That uncertainty has boosted the precious metal to a series of records in recent weeks.
June gold futures rose 0.6% Tuesday to settle at $3,247.80 an ounce on Comex, though the front-month fell 2.9% in the first two days of the week. Bullion increased 5.4% in April after gaining 11% in March and adding 0.5% in February. It’s up 23% so far this year. The metal rose 27% in 2024, its biggest annual gain since 2010. The June contract is currently down $52.00 (-1.60%) an ounce to $3195.80 and the DG spot price is $3187.90.
Equities also climbed Tuesday, with the Dow Jones industrial average adding 1,100 points and the S&P 500 Index gaining 3% on the U.S.-China agreement. U.S. benchmark indexes erased their 2025 losses because of the announcement of the mutual tariff revisions set to take effect Wednesday.
Meanwhile, the U.S. consumer price index, a key inflation measure, rose just 2.3% on an annual basis, its lowest level since February 2021. So-called core CPI, which excludes volatile food and energy prices, increased 0.2% month on month and 2.8% year on year. The forecasts for core CPI were 0.3% and 2.8% respectively.
Investors closely watch both inflation and the labor market for indications on the state of the economy and the likelihood of the Federal Reserve’s next moves on monetary policy. The central bank last week left interest rates unchanged again at 4.25% to 4.50% last week. The producer price index is scheduled for release Thursday, along with U.S. weekly initial jobless claims.
Most investors tracked by the CME FedWatch Tool now expect the Fed to begin interest rate cuts in September, not the next two scheduled policy meetings in June and July. Lower interest rates are typically bullish for gold, making the yellow metal a more attractive alternate investment.
The Fed left rates unchanged at policymakers’ meetings this year after reducing rates three times in 2024. The central bank began raising interest rates in March 2022 to fight inflation, ultimately imposing increases of by 5.25 percentage points before beginning rate cuts last year. Previously, the Fed had kept rates at 5.25% to 5.50% for a year.
Front-month silver futures gained 1.5% Tuesday to settle at $33.10 an ounce on Comex, and the July contract increased 0.6% in the first two days of the week. Silver dropped 5.2% last month after advancing 9.9% in March and retreating 2.4% in February. It gained 21% in 2024. The July contract is currently down $0.645 (-1.95%) an ounce to $32.455 and the DG spot price is $32.36.
Spot palladium climbed 1.7% Tuesday $967.00 an ounce, but was down 2% in the first two days of the week. Palladium fell 4.9% last month after rising 7.3% in March and retreating 10% in February. Palladium dropped 17% last year. Currently, the DG spot price is up $6.00 an ounce to $971.50.
Spot platinum advanced 1.1% Tuesday to $996.00 an ounce but fell 1.3% in the first two days of the week. Platinum retreated 3.1% in April after increasing 6.7% in March and sliding 4.7% in February. Platinum lost 8.4% in 2024. The DG spot price is currently down $7.30 an ounce to $989.90.
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