The demand for traditional safe-haven assets continues to wea
Quick overview
- The demand for traditional safe-haven assets like gold is weakening due to optimism surrounding the US-China trade truce.
- Gold prices fell below the $3,200 mark, marking the biggest weekly decline since June 2021.
- Investors are reducing gold exposure following the announcement of upcoming US-China trade talks in Geneva.
- Stock markets have surged since the tariff truce, diminishing the safe-haven focus that previously drove gold prices to record highs.
The demand for traditional safe-haven assets continues to weaken due to the recent optimism surrounding the US-China trade truce. As a result, bullion failed to maintain the strong recovery it had shown the previous day from the $3,120 area, which had been a one-month low. The week ended with bullion falling below the $3,200 mark.
This represents the biggest weekly decline in the precious metal since June 2021.
Investors began to reduce gold exposure following last week’s announcement that the United States and China would meet in Geneva for trade talks, which resulted in an agreement.
The US Treasury bond yields continued to fall due to Thursday’s weaker US macro data, which confirmed expectations for additional interest rate cuts. Although this does not support the non-yielding price of gold, it keeps the US dollar on the defensive for the second consecutive day.
The intraday bearish sentiment surrounding the XAU/USD pair is not significantly affected by geopolitical event risk. Amid increased concerns about the trade war, the price of gold has now dropped 9% from its peak of $3,500 last month.
Stock markets have surged since the tariff truce was announced over the weekend, temporarily diminishing some of the safe-haven focus that pushed gold to record highs in recent months.
XAU/USD is still reversing course amid expectations of positive global growth following Monday’s much better-than-expected US-China news. These expectations are creating a more aggressive sentiment.
Olumide Adesina
Financial Market Writer
Olumide Adesina is a French-born Nigerian financial writer. He tracks, analyzes, and reports changes in financial markets with over 15 years of working experience in investment trading.
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