Gold prices stabilized around $4,000 per ounce as traders assessed the implications of the U.S.-China trade truce, which failed to dispel concerns over long-term competition between the world's two largest economies.
During Friday's Asian trading session, spot gold initially fell 0.8% before partially recovering. The leaders' meeting appeared to temporarily resolve months of brinkmanship, though the one-year truce may only stabilize bilateral relations while allowing both sides time to reduce strategic interdependence. This easing of tensions also highlights China's growing economic influence since Trump's first presidential term—a shift fueling demand for safe-haven assets.
Gold has declined for two consecutive weeks, down roughly 8% from its October 20 record high above $4,380 per ounce. The retreat partly reflects diminished expectations for further Fed rate cuts after Chair Jerome Powell, following Wednesday's 25-basis-point reduction, cautioned against anticipating another cut in December.
Outflows from gold ETFs have also weakened a key driver of the metal's earlier rally. Bloomberg data shows total ETF holdings fell for six straight days through Wednesday—the longest streak since April.
Westpac's commodity analyst Robert Rennie noted, "The hawkish rate cut, trade truce, and massive ETF outflows collectively accelerated gold's correction," suggesting prices could retreat to around $3,750.
Despite the pullback, the World Gold Council reported Thursday that gold remains up over 50% year-to-date, supported by institutional investors hedging portfolio risks and central banks accelerating purchases. Q3 global central bank gold buying rose 28% quarterly, reversing earlier declines.
At 8:02 AM London time, spot gold dipped slightly to $4,021.21, while the Bloomberg Dollar Spot Index gained 0.1%. Silver, platinum, and palladium all advanced.
AT Global Markets' chief analyst Nick Twidale observed, "Renewed uncertainty post-truce may attract bargain-hunting support for gold through year-end," suggesting the correction could be nearing its end.