Gold prices slipped on Monday, May 12, as optimism surrounding the US-China trade talks eased market fears, pushing investors away from safe-haven assets like gold toward riskier investments.
Spot gold fell 1.4% to $3,277.68 per ounce, while US gold futures lost 1.9%, trading at $3,281.40 per ounce.
In India, the price of gold
stands at ₹9,688 per gram for 24 karat gold, ₹8,880 per gram for 22 karat gold, and ₹7,266 per gram for 18 karat gold (999 gold), according to data from Goodreturns.
The optimism in the market can be attributed to the positive developments in the US-China trade negotiations.
Over the weekend, US and Chinese officials met in Switzerland, and the trade talks ended on a positive note. US officials touted a deal aimed at reducing the US trade deficit, while Chinese officials reported that they had reached “important consensus.”
Chinese Vice Premier He Lifeng stated that a joint statement would be released in Geneva on Monday (May 12). The talks signaled progress in resolving the trade tensions that had escalated over the past months, including the imposition of over 100% tariffs on each other’s goods, which had fueled fears of a global recession.
As a result, investor sentiment shifted, and the demand for gold, traditionally seen as a hedge against economic and political uncertainties, weakened.
The strength of the dollar also played a significant role in the dip in gold prices. As the US dollar advanced on the back of the positive trade talks, gold became less attractive to investors holding other currencies.
The rising dollar index put additional downward pressure on the precious metal, which is typically inversely correlated with the strength of the US currency.
Looking ahead, experts believe that gold may continue to face downward pressure in the short term.
Jigar Trivedi, senior commodity analyst at Reliance Securities, noted that with reduced geopolitical risks and a stronger dollar, gold could decline further, potentially touching $3,200 per ounce.
Traders are also awaiting the release of key US economic data, including the Consumer Price Index (CPI) on Tuesday, which could provide fresh insights into the Federal Reserve’s monetary policy trajectory.
For investors, the outlook for gold remains mixed.
While the short-term picture is weighed down by a stronger dollar and reduced geopolitical risks, gold remains a valuable hedge against economic instability in the long run.
If the Fed signals a more dovish policy stance or if geopolitical tensions rise again, gold could see renewed demand.