Gold prices fell more than 2% to a three-week low on Tuesday, pressured by renewed optimism over easing U.S.-China trade tensions that lifted investor appetite for riskier assets.
Spot gold dropped to $3,899.94 per ounce, its lowest since October 6, while U.S. gold futures slid 2.6% to $3,915.30. Analyst Ricardo Evangelista of ActivTrades said optimism around avoiding a trade war has boosted stocks while reducing demand for safe-haven assets like gold.
The decline followed comments from U.S. President Donald Trump, who said a trade deal with China was within reach and announced several trade and mineral agreements with Southeast Asian nations. Top U.S. and Chinese officials reportedly outlined a draft deal for final approval later this week.
Investors are now turning their focus to the Federal Reserve’s policy meeting, where a rate cut is widely expected. Lower interest rates generally support gold, a non-yielding asset, but risk-on sentiment has muted demand.Despite the drop, gold remains up about 53% this year, after hitting a record $4,381.21 on October 20. However, analysts at Citi and Capital Economics have lowered short-term forecasts to $3,800 and $3,500 per ounce, respectively.