Gold Price Dips Amid Positive US-China Trade Developments

May 13, 2025– Gold prices steadied after experiencing a sharp selloff, as optimism surrounding the de-escalation of US-China trade tensions reduced demand for safe-haven assets. The precious metal, which had fallen 2.7% on Monday, hovered around $3,240 an ounce, as investors shifted their focus to a potential recovery in stocks and riskier assets.

US-China Trade Tensions Ease, Affecting Gold’s Safe-Haven Appeal

The world’s two largest economies, the US and China, reached a temporary agreement to lower tariffs. The US reduced its duties on Chinese products to 30% from 145% for a 90-day period, while China cut its tariff on most US goods to 10%. This news sparked optimism in global markets, which in turn hurt gold prices, as investors anticipated a stabilization in trade relations and a recovery in riskier assets.

Strong US Dollar and Rising Treasury Yields Weigh on Gold Prices

The US dollar surged, posting its biggest jump since the post-election rally in November, and Treasury yields climbed. These factors presented additional headwinds for gold, which typically struggles when interest rates rise and the US dollar strengthens. Additionally, traders adjusted their expectations, now forecasting just two rate cuts from the Federal Reserve in 2025, reducing the appeal of gold as a non-yielding asset.

Gold Prices Hold Strong Despite Easing US-China Tensions

Although gold remains nearly a quarter higher this year, easing US-China tensions have led investors to believe the Trump administration is taking a softer stance on trade. However, the lack of detail in the recent announcements still leaves some room for caution. A flare-up in trade tensions could push gold prices back toward recent highs.

Market Outlook: Caution Amid Optimism

Christopher Wong, a strategist from Oversea-Chinese Banking Corp., stated, “The devil is in the details during negotiations,” urging investors to maintain caution despite the positive sentiment. He also noted that gold prices could consolidate in the range of $3,150 to $3,350 an ounce.

Spot Gold and Other Precious Metals Performance

Spot gold held steady at $3,239.66 an ounce as of 12:31 p.m. in Singapore, with the Bloomberg Dollar Spot Index easing after its 1% rise on Monday. Meanwhile, silver and platinum saw gains, while palladium remained mostly unchanged.

Key Takeaways:

• Gold prices steady after a sharp selloff as US-China trade tensions ease.

• US dollar and Treasury yields rise, presenting headwinds for gold.

• Investors expect two rate cuts from the Federal Reserve in 2025, diminishing gold’s appeal.

• Despite optimism, investors remain cautious, watching for more details in the US-China trade talks.

• Gold price range expected to consolidate between $3,150 and $3,350 an ounce.

Gold’s future price movements will largely depend on further developments in US-China trade negotiations and shifts in global market sentiment. The metal’s appeal as a safe-haven asset may resurge should tensions flare again.