- Gold price experiences a sharp decline following the announcement of a significant tariff reduction agreement between the US and China for a 90-day period.
- Under the agreement, China will reduce its tariffs on US goods from 125% to 10%, while the US will lower its tariffs on Chinese goods from 145% to 30%.
- The flight from safe-haven assets precipitates a breach of critical support levels for Gold, effectively concluding its recent upward trajectory from a technical perspective.
Gold (XAU/USD) is currently experiencing a substantial decline, plummeting by over 3.0% as the European trading session commences, and trading near $3,210 at the time of this report. This downturn is largely attributed to the positive developments emerging from trade negotiations between the United States and China, which have yielded initial benefits for equity markets. Specifically, China has committed to reducing its tariffs on goods imported from the United States (US) from a previous rate of 125% to a significantly lower 10%. Concurrently, the US has agreed to decrease its tariffs on Chinese goods from 145% to 30%, with both sets of tariff adjustments being implemented for a period of 90 days. This announcement has triggered a notable “risk-on” sentiment across global markets, prompting investors to divest from traditional safe-haven assets such as Gold and reallocate capital towards riskier asset classes. The immediate market reaction reflects increased optimism regarding global economic growth prospects and a reduction in trade-related uncertainties.
Earlier on Friday, US President Donald Trump had already alluded to the potential for constructive outcomes from the ongoing trade discussions, issuing a general recommendation on his Truth Social Network to “buy stocks now.” This proactive stance from the President further fueled market anticipation of a positive resolution. Consequently, Gold has already depreciated by more than 8% from its all-time high of $3,500, which was attained on April 21. This rapid descent underscores the sensitivity of the precious metal to shifts in investor sentiment and macroeconomic conditions. Market analysts are closely monitoring upcoming economic data releases, including inflation figures and employment reports, to gauge the potential impact on future monetary policy decisions by the Federal Reserve and other central banks. These decisions will likely play a crucial role in shaping the trajectory of gold prices in the near term.
