Gold falls below $4,000 as US–China trade thaw eases safe-haven demand
Gold price slides below $4,000 for the first time since mid-October, hitting a daily low of $3,971 as risk appetite improved due to easing tensions between the US and China in regard to the trade war. Nevertheless, expectations that the Federal Reserve (Fed) would resume its easing cycle could prompt investors to buy the yellow metal.
Yellow metal slips nearly 3% despite firm Fed rate cut expectations
XAU/USD trades at $3,995, losing 2.80% amid a trading session that is also witnessing a weaker US Dollar and falling US Treasury yields. Negotiations between US and Chinese officials over the weekend delivered a framework for a deal between Washington and Beijing, which would pause American tariffs on Chinese products in exchange for no rare earth mineral controls on US companies.
US President Donald Trump is expected to meet China's President Xi Jinping on Thursday.
Bullion is also facing headwinds as the People's Bank of China (PBoC) paused its Gold buying program, as reported by data from Hong Kong. The report showed that September's net exports to China fell 17.6% MoM.
A higher probability of an interest rate reduction by the Fed at the October 28-29 meeting could drive Gold prices higher as the yellow metal typically performs well amid a low interest rate environment.
Expectations that the Fed will cut rates at the October 28-29 meeting are at 96%, according to the Prime Market Terminal interest rate probability tool.
Source: Fxstreet
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