Gold prices rebounded on Tuesday as investors took advantage of recent dips following the metal’s lowest level in over a week. The recovery came amid a surge in risk appetite, sparked by an agreement between the United States and China to temporarily ease mutual tariffs, reducing the appeal of safe-haven assets like gold.
Spot gold gained 0.5% to $3,250.50 per ounce by 04:58 GMT, after a sharp 2.7% drop in the previous session. Meanwhile, US gold futures rose 0.9% to $3,255.30, reports Al-Rai daily.
The turnaround followed a two-day round of negotiations in Geneva, where Washington and Beijing agreed to reduce tariffs for a period of three months. The US cut tariffs on Chinese goods from 145% to 30%, while China lowered tariffs on American imports from 125% to 10%, a move that lifted global equity markets and subdued safe-haven demand.
“The prospect of improved trade relations between the world’s two largest economies has boosted risk appetite and, consequently, reduced demand for safe haven assets,” said Tim Waterer, senior market analyst at KCM Trade.
Investors are now focused on the upcoming US Consumer Price Index (CPI) report, due later Tuesday, which may offer new signals about the Federal Reserve’s next policy moves.
Markets are currently pricing in a 55 basis-point rate cut by the Fed before the end of the year, likely beginning in September.
“If inflation data doesn’t show a decline, it could weaken the dollar’s momentum, which could contribute to gold’s future rise,” Waterer added.
Gold is traditionally seen as a safe-haven asset, performing well during times of economic or geopolitical uncertainty, and generally benefits from lower interest rates.
