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Gold prices edged lower in Asian trading on Wednesday, retreating further from this week’s record highs after U.S. President Donald Trump struck a conciliatory tone on both China trade tariffs and the Federal Reserve, fueling a shift from safe-haven assets to riskier bets.
As of 01:22 ET (05:22 GMT):
- Spot gold fell 1% to $3,347.54/oz
- Gold futures (June expiry) dropped 1.8% to $3,356.99/oz
- This pullback follows a record high of $3,500.33/oz touched just one day earlier.
Trump’s Softer Tone Cools Risk Aversion
Markets reacted swiftly to Trump’s Tuesday comments indicating:
- He was open to lowering tariffs on China, contingent on Beijing’s willingness to negotiate.
- He walked back threats to remove Fed Chair Jerome Powell, reducing fears about the central bank’s independence.
These remarks eased investor anxiety over a potential U.S. recession, reducing demand for safe-haven gold and prompting a broad rally in equities.
Additionally, a modest rebound in the dollar contributed to the retreat in gold, as a stronger dollar typically makes gold less attractive to foreign investors.
U.S.-China Trade Outlook Still Clouded
Despite Trump’s comments and Treasury Secretary Scott Bessent calling the trade war “unsustainable,” China has shown no signs of capitulation. The current tariff regime—145% U.S. tariffs and 125% Chinese countermeasures—remains intact, sustaining a level of geopolitical risk that continues to offer some support to gold.
Metals Mixed on Sentiment Shift
- Silver futures fell 0.6% to $32.720/oz
- Platinum futures rose 0.7% to $961.70/oz
- Copper extended gains on optimism over China’s economic outlook:
- London copper futures +0.4% to $9,424.20/ton
- U.S. copper futures +1.1% to $4.9020/lb
JP Morgan: Gold to Reach $4,000/oz by Mid-2026
JP Morgan reaffirmed its bullish gold forecast, projecting a rise to $4,000/oz by Q2 2026 due to:
- Prolonged global uncertainty
- Recession risks stemming from tariffs and trade disruptions
- Strong central bank buying
However, the bank also outlined two key downside risks:
- A sudden drop in central bank demand
- Unexpected strength in the U.S. economy, which could reduce the need for gold as a hedge
Outlook
While today’s dip reflects profit-taking and a cooling of risk aversion, the underlying macro environment remains volatile. Investors are expected to keep gold on their radar, particularly as Trump’s policy decisions remain fluid and U.S.-China trade dynamics evolve.
Gold may face short-term headwinds, but analysts continue to see strong long-term fundamentals for the yellow metal.
