Gold Prices Retreat Below $4,000 as Trade Optimism and Fed Meeting Weigh on Demand

Gold prices continued their decline in Asian trading on Tuesday, extending losses after slipping below the key $4,000-per-ounce mark. Spot gold fell 0.4% to $3,963.60 an ounce by 01:58 ET (05:58 GMT), while U.S. gold futures dropped 1% to $3,981.59 per ounce. The yellow metal has now fallen more than 10% from its record high of $4,381.29 reached just a week earlier, marking its steepest retreat in over two weeks.

The sharp downturn followed reports of easing tensions between the United States and China. Negotiators from both countries reached a preliminary trade framework during weekend talks in Kuala Lumpur, aiming to prevent new tariffs and sanctions. This development lifted investor confidence, reducing demand for gold as a traditional safe-haven asset. Optimism is now building ahead of a potential breakthrough when President Donald Trump meets Chinese President Xi Jinping later this week.

Despite the correction, gold remains up over 50% this year, buoyed by strong central bank purchases and record inflows into gold-backed ETFs. According to ING analysts, the recent dip could present buying opportunities for central banks looking to diversify reserves.

Investor focus has now shifted to the Federal Reserve’s two-day policy meeting, which concludes Wednesday. Markets widely expect a 25 basis-point rate cut. While lower interest rates typically support gold by reducing real yields, analysts note that much of this expectation is already priced in, potentially capping short-term gains.

Other metals also weakened amid a broader risk-on sentiment. Silver futures fell 0.6% to $46.49 per ounce, platinum dropped 1.6% to $1,556.60, and benchmark copper futures slipped 0.6% to $10,948.95 per ton after hitting a record high earlier this week. Analysts remain cautiously optimistic on copper, citing improving trade prospects and ongoing supply disruptions as key bullish factors.