Gold prices fell in early trading on Friday as news surfaced that China is considering suspending tariffs on some U.S. imports, a move that could ease ongoing trade tensions between the two countries. As of 0421 GMT, spot gold dropped 0.8%, settling at $3,322.36 per ounce, while U.S. gold futures lost 0.5%, reaching $3,332.90.
IG Market strategist Yeap Jun Rong noted that the potential partial rollback of tariffs could be seen as a positive step toward de-escalation in U.S.-China trade relations, which has applied some downward pressure on gold, traditionally viewed as a safe-haven asset.
China’s Tariff Adjustments and Trade Talks
Reports suggest that China is considering exempting certain U.S. imports from its current 125% tariffs and has asked businesses to identify eligible goods. This marks the most significant indication yet that Beijing is concerned about the economic impact of the trade war.
Meanwhile, U.S. President Donald Trump asserted that trade negotiations with China are ongoing, refuting Chinese claims that no discussions are taking place to address the trade dispute. A spokesperson from China’s commerce ministry responded, urging the U.S. to lift all unilateral tariffs if it genuinely seeks to resolve the conflict.
Gold’s Long-Term Outlook and Fed Policy
Despite the recent pullback, gold has gained over $700 this year, reaching a record high of $3,500.05 earlier this week. The precious metal has benefited from a low interest rate environment and remains a preferred asset in times of geopolitical uncertainty. However, Rong highlighted that the structural tailwinds for gold remain intact over the longer term, as emerging markets continue to diversify their reserves to better align with advanced economies.
On the U.S. economic front, Federal Reserve officials have indicated that there is no immediate need for policy changes, with officials seeking more data to assess the impact of the Trump administration’s tariffs on the U.S. economy.
Geopolitical Tensions and Market Sentiment
On the geopolitical front, President Trump also condemned Russian President Vladimir Putin following a missile and drone attack on Ukraine’s capital, Kyiv, which resulted in at least 12 deaths. This marked one of the deadliest strikes this year and continues to contribute to global instability, adding further support for gold as a safe-haven asset.
As the U.S.-China trade saga continues to unfold, investors will remain vigilant of any further developments that may impact gold prices and broader market sentiment.
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