By Frank Walbaum, Market Analyst at Naga
Gold fell toward USD 4,000 per ounce on Monday, extending last week’s sharp decline, as optimism around US-China trade negotiations reduced safe-haven demand. Hopes that President Donald Trump and President Xi Jinping could move closer to a trade agreement at their meeting later this week lifted investor confidence, which could favour riskier assets.
The metal now enters a pivotal week for global monetary policy. The Federal Reserve is widely expected to deliver a 25-basis-point rate cut on Wednesday, providing a soft floor for bullion. In contrast, both the European Central Bank and the Bank of Japan are expected to hold rates steady, underscoring a diverging policy backdrop and potentially placing additional selling pressure on the precious metal. Markets will pay close attention to Chair Jerome Powell’s forward guidance. Dovish remarks could weigh on US treasuries and benefit gold prices.
Despite the improvement in risk sentiment, geopolitical tensions remain a key source of support. In Eastern Europe, fresh military escalations kept the conflict at the forefront, preventing a deeper correction in bullion.