NEW YORK: Gold fell more than 2 percent to a three-week low on Tuesday, as optimism over easing trade tensions lifted risk appetite and squeezed demand for safe-haven bullion, while investors turned their attention to the Federal Reserve policy meeting this week. Spot gold was down 1.4 percent at USD3,924.99 per ounce, as of 1140 GMT, hitting its lowest level since October 6.
US gold futures for December delivery lost 2percent to USD3,940.20 per ounce.
“Hopes of avoiding a full-out trade war between the US and China ... (are) driving a rally for risk-related assets like shares. On the other side, it’s negatively impacting the demand for safe-haven assets like gold,” said ActivTrades analyst Ricardo Evangelista.
US President Donald Trump on Monday said he thought a trade agreement would be reached with China, and announced a flurry of deals on trade and critical minerals in Malaysia with four Southeast Asian nations.
Top Chinese and US economic officials hashed out the framework of a trade deal on Sunday for Trump and his Chinese counterpart Xi Jinping to decide on when they meet on Thursday.
Asian shares consolidated recent hefty gains on Tuesday as hopes for thawing global trade tensions kept risk appetite keen. Meanwhile, the Fed is widely expected to cut interest rates at the end of its policy meeting on Wednesday, with investors awaiting any forward-looking commentary from Chair Jerome Powell.
Gold, a traditional safe-haven, benefits from low-interest environments as it is a non-yielding asset. Spot prices have gained about 53 percent this year, reaching an all-time peak of USD4,381.21 on October 20, before falling 3.2 percent this week.
Citi analysts on Monday lowered their zero-to-three month forecast for gold prices to USD3,800/oz from USD4,000/oz, while Capital Economics reduced their forecast to USD3,500/oz for the end of 2026. Elsewhere, spot silver fell 0.9 percent to USD46.47 per ounce, its lowest in over a month, while platinum slipped 1.6 percent to USD1,565.20 and palladium lost 2.4percent to USD1,368.48, a more than three-week low.
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