Gold plunged more than 2% to a three-week low on Tuesday (October 28th), as optimism over easing trade tensions boosted risk appetite and dented demand for bullion as a safe-haven asset, while investors shifted their attention to this week's Federal Reserve policy meeting.

Spot gold prices fell 2% to $3,899.94 per ounce at 08:57 GMT, hitting their lowest level since October 6th. US gold futures for December delivery fell 2.6% to $3,915.30 per ounce.

"Hopes to avoid a full-blown trade war between the US and China... (are) driving a rally in risk assets like stocks. On the other hand, this is negatively impacting demand for safe-haven assets like gold," said ActivTrades analyst Ricardo Evangelista.

US President Donald Trump said Monday he was confident a trade deal with China would be reached, and announced a series of key trade and mineral deals in Malaysia with four Southeast Asian countries.

Top Chinese and US economic officials discussed the framework of a trade deal on Sunday, which Trump and his Chinese counterpart, Xi Jinping, will decide on when they meet on Thursday.

Asian stocks consolidated their recent sharp gains on Tuesday as hopes for an easing of global trade tensions kept risk appetite high. Meanwhile, the Fed is widely expected to cut interest rates at the conclusion of its policy meeting on Wednesday, with investors awaiting forward-looking comments from Chairman Jerome Powell.

Gold, a traditional safe-haven asset, benefits from the low-interest-rate environment because it is a non-yielding asset. Spot prices have risen about 53% this year, hitting an all-time high of $4,381.21 on October 20, before falling 3.2% this week.

On Monday, Citi analysts lowered their zero-to-three-month gold price forecast to $3,800/oz from $4,000/oz, while Capital Economics lowered their forecast to $3,500/oz for the end of 2026.

Elsewhere, spot silver fell 2.5% to $45.71 per oz, its lowest level in more than a month, while platinum fell 3.3% to $1,538.50 and palladium fell 3.3% to $1,356.0, its lowest level in more than three weeks. (alg)

Source: Reuters