Stocks head higher as US and China agree temporary deal

Gold prices fell on Monday as signs of easing trade tensions between the United States and China prompted investors to pivot away from safe-haven assets in favour of riskier bets.

Gold futures were down by 3.5% to $3,226.30 per ounce, while the spot gold price lost 2.8% to $3,234.59 per ounce.

The drop follows constructive trade discussions over the weekend that market participants interpreted as a potential turning point in strained relations between the world’s two largest economies.

China’s vice premier He Lifeng described the talks with US officials as “an important first step” in stabilising bilateral trade relations. US Treasury secretary Scott Bessent echoed that sentiment, saying the two sides had made “substantial progress.”

The more upbeat tone in trade diplomacy has eased fears over additional tariffs and contributed to the unwinding of positions in traditional safe-haven assets such as gold.

Nikos Tzabouras, senior market Analyst at Tradu.com, said: “Gold dips amid risk-on mood sparked by the US-China trade agreement that dulls demand for safe havens. The substantial rollback in duties, coupled with growing optimism about further trade deals with other partners, opens the door for a deeper pullback in gold prices.

“However, the relief may prove short-lived. The agreement represents a temporary pause, not a comprehensive resolution, and negotiations for a broader deal are expected to be more complex. As a result, trade uncertainty is likely to persist, potentially underpinning continued interest in gold as a hedge against geopolitical and economic volatility.”

Gold, which historically benefits during periods of economic and political uncertainty, also tends to perform well in low-interest rate environments. However, shifting expectations for US monetary policy and reduced geopolitical tensions have weighed on the metal in recent sessions.

On Friday, Cleveland Federal Reserve president Beth Hammack said the central bank needed more time to assess the economic fallout from Trump’s tariff measures before determining its policy response.

“In the near term, gold possibly [will] continue to decline as the dollar could appreciate and amid reducing geopolitical risk the haven demand too may drop hence, the yellow metal may decline to $3,200/oz in the near term,” Jigar Trivedi, senior commodity analyst at Reliance Securities, said.

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