Gold Prices Stumble as Fed Hawkishness and Trade Talks Cool Rally

International gold prices are facing a sharp correction. The market has lost momentum after a strong rally this year. Prices fell significantly in recent trading sessions. Investors are reacting to signals from the Federal Reserve and uncertain US-China trade developments.

According to Reuters, spot gold traded around $3,997.79 per ounce. This marked a notable decline from previous highs. On the COMEX exchange, December gold futures fell sharply. This was the biggest single-day drop witnessed in over a decade.

Federal Reserve Policy Weighs on Gold

The primary pressure comes from the US central bank. Federal Reserve Chair Jerome Powell recently signaled a cautious approach. He indicated that interest rate cuts are not a guaranteed near-term action.

This hawkish stance strengthens the US dollar. A stronger dollar makes gold more expensive for holders of other currencies. Consequently, investor demand for the non-yielding metal has softened. This shift follows months of sustained price increases.

Limited Progress from US-China Summit

Traders also digested outcomes from the latest US-China summit. The meeting in Busan produced only limited progress. Agreements included a small reduction in US tariffs and a delay on certain Chinese export controls.

Analysts noted the talks did not resolve core trade tensions. Chinese leadership later emphasized a “multilateral trade system.” This was widely seen as a subtle message to Washington. The uncertainty has capped gold’s potential for gains.

Market Analysts Predict Further Adjustment

Experts believe the correction phase may continue. A combination of factors is currently dampening sentiment. These include the Fed’s position, the tentative trade truce, and outflows from gold-backed ETFs.

Robert Rennie, an analyst at Westpac Bank, highlighted these pressures. He suggested gold could potentially drop further, possibly testing the $3,750 per ounce level. While global uncertainties provide some support, the sharp rally has clearly paused.

The recent volatility underscores gold’s sensitivity to monetary policy and geopolitical developments. While long-term prospects may remain intact, the path for gold prices appears set for a period of consolidation as markets await clearer signals.

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Why are gold prices falling from near $4,000?

Prices are declining due to a stronger US dollar and the Federal Reserve’s stance. Higher interest rates reduce the appeal of non-yielding assets like gold. This has prompted some investors to take profits.

How did US-China talks impact the market?

The summit resulted in only partial progress on trade issues. The lack of a major breakthrough limited safe-haven demand for gold. Traders are adopting a wait-and-see approach.

What is the gold price outlook for next month?

Analysts expect continued adjustment in the near term. Prices could test lower levels if ETF outflows persist and the Fed remains hawkish. Support around $3,750 is a key level to watch.

Could prices recover quickly?

A swift recovery is unlikely without a new catalyst. A confirmed Fed rate cut or a significant escalation in geopolitical tensions would be needed to reignite a strong bullish trend.

Trusted Sources: Reuters, Bloomberg, Westpac Banking Corporation