Gold is below $4,000 as talks between the United States and China progress

Gold prices fell below $4,000 per ounce on Monday, as signs of a decline in trade tensions between the United States and China reduced the appeal of the yellow metal as a safe haven.

This decline comes as market participants await the Federal Reserve’s decision on interest rates this week.

By 10:51 a.m. EST (14:13 GMT), spot gold fell 2.9 percent to $3,990.89 per ounce. US gold futures for December delivery also fell by 3.2 percent to record $4,005.20.

“A potential trade deal between the U.S. and China threatens to reduce the need for safe-haven assets like gold,” noted David Meagher, director of metals trading at High Ridge Futures.

Gold had risen to a record high of $4,381.21 per ounce on October 20, but fell by 3.2 percent last week following hints of easing trade tensions between the world’s two largest economies. On Sunday, negotiators from both sides laid out a framework for a deal aimed at suspending further US tariffs and postponing Chinese controls on rare earth exports. US President Donald Trump and his Chinese counterpart Xi Jinping are expected to meet on Thursday to discuss the trade agreement more broadly.

For his part, Jeffrey Christian, managing partner at CBM Group, explained that gold “is witnessing a further decline due to the dismantling of trade tensions that had pushed prices from $3,800 to $4,400 over the first three weeks of October,” in addition to technical selling operations.

The Fed’s interest rate decision is expected on Wednesday, with markets seeing a 97 percent chance of a quarter-point rate cut. It is noteworthy that gold, as a non-yielding asset, usually benefits from a low interest rate environment.

Although most analysts and investors expect a further rise in the precious metal, and even place a price of $5,000 per ounce on the horizon, some question the sustainability of this recent rise.

In this context, Capital Economics analysts, on Monday, reduced their expectations for the price of gold to $3,500 per ounce by the end of 2026. They noted that “the 25 percent jump in prices since August is much more difficult to justify than previous movements during gold’s rise.”

In a related context, the prices of other precious metals declined. Spot silver fell by 4.8 percent to $46.28 per ounce, and platinum fell by 1.1 percent to $1,587.92. Palladium lost 2.6 percent, reaching $11,391.34.