Gold Dips $100 from Record High as US-China Tensions Ease, Yet Shines with 29% YTD Gain

Gold prices slid $100 from a record high of $3,500, retreating to around $3,400, down 0.63%, as US Treasury Secretary Scott Bessent signaled a de-escalation with China, boosting market optimism and curbing demand for safe-haven assets. Despite the pullback, gold remains up 29% year-to-date, driven by Federal Reserve uncertainty, trade risks, and geopolitical tensions.

The World Gold Council reported $21 billion in Q1 ETF inflows, the second-highest quarterly figure ever, underscoring robust investor demand. Gold ETFs saw $8.6 billion in March alone, reflecting a flight to safety amid economic uncertainty.

Market Dynamics

US-China Relations: Bessent’s comments on de-escalation spurred a risk-on mood, pushing gold prices down $50 from $3,420 to $3,370.

Fed Uncertainty: Fed Chair Jerome Powell highlighted a potential stagflationary scenario, noting tensions between inflation and employment goals, keeping gold attractive.

Trade and Geopolitics: President Trump’s trade policy swings and criticism of the Fed continue to bolster gold’s appeal.

Yields and Rates: US 10-year Treasury yields dipped to 4.395%, with real yields at 2.175%. Markets expect 91 basis points of Fed rate cuts by end-2025, with the first cut likely in July.

Key Data to Watch

This week’s US economic calendar includes Fed speakers, S&P Global Flash PMIs, Durable Goods Orders, and the University of Michigan Consumer Sentiment final reading, all of which could sway gold prices.

Despite short-term profit-taking, gold’s outlook remains strong as investors navigate an uncertain economic landscape and flock to the yellow metal for safety.