Gold prices dropped 3 percent on Monday to their lowest level in over a week after the United States and China announced an agreement to reduce mutual tariffs, strengthening the U.S. dollar and diminishing the appeal of gold as a safe-haven asset.
UBS analyst Giovanni Staunovo explained that the temporary easing of trade tensions, with a 90-day tariff reduction, has reduced demand for assets like gold. He noted, however, that price volatility is likely to persist.
By 08:12 GMT, spot gold was down 3 percent at $3,224.34 per ounce, the lowest since May 1. U.S. gold futures also slipped 3.5 percent to $3,228.10.
“High tariffs are still weighing on global growth,” Staunovo added. “Central banks may respond by cutting interest rates further this year and could also take advantage of the current price drop to bolster their gold reserves.”
