Gold falls 2% on easing US-China trade tensions

Gold fell 2% on Thursday, hitting a near one-month low, after a U.S.-China trade agreement boosted risk appetite and diminished bullion’s appeal as a safe-haven asset.

Spot gold eased 1.7% to $3,271.59 per ounce by 1130 a.m. EDT (1530 GMT), after dropping to its lowest level since May 29 earlier in the session. Bullion was down for a second straight week, slipping 2.8% so far.

U.S. gold futures dropped 1.9% to $3,283.30.

“The slowdown in geopolitics has offered an opportunity for investors to start taking profit because of the forward-looking prospects of some kind of kinetic war with China and the developments in the Middle East,” said Daniel Pavilonis, senior market strategist at RJO Futures.

A trade agreement between the U.S. and China on Thursday on how to expedite rare earth shipments to the U.S. was seen by markets as a positive sign. Following this, global shares rallied.

In the Middle East, the ceasefire agreement between Iran and Israel continues to hold following a few skirmishes at the start.

On the data front, U.S. consumer spending unexpectedly fell in May as the boost from the pre-emptive buying of goods like motor vehicles ahead of tariffs faded, while monthly inflation increases remained moderate.

Traders added to bets the Federal Reserve will lower short-term borrowing costs by 75 basis points in 2025, most likely starting in September, after the data.

However, the data isn’t moving the needle on gold as it is seeing sell-off due to geopolitics, Pavilonis added.

A stable geopolitical and economic environment reduces gold’s safe-haven appeal driving investors towards riskier assets, while high interest rates make gold less favourable due to its non-yielding nature.

Spot silver slipped 1.4% to $36.11 and platinum fell 5.3% to $1,341.98, but both metals were headed for weekly rise.

Palladium rose 0.1% to $1,132.65, and was set for second straight weekly gains.