Gold prices steadied in Asian trade on Wednesday after extending a dramatic sell-off earlier in the session, as easing U.S.-China trade tensions and expectations of progress in global trade negotiations reduced bullion’s safe-haven appeal.
Gold recovers slightly after sharp drop
Spot gold rose 0.1% to $4,127.95 per ounce as of 00:21 ET (04:21 GMT), recovering modestly after slipping to as low as $4,003.39/oz earlier in the day. U.S. gold futures gained 0.9% to $4,144.51/oz.
The yellow metal plunged over 5% on Tuesday, marking its steepest single-day decline since 2020. This came after a record rally that pushed prices to an all-time high of $4,381.21/oz earlier this week, supported by geopolitical concerns and expectations of U.S. monetary easing.
Profit-taking and trade optimism weigh on bullion
Analysts attributed the latest correction largely to profit-taking in an overheated market.
“The catalyst appears to be profit-taking in a market that has been hugely overbought in recent weeks,” ING analysts said in a note. “Clearly, market participants were getting increasingly nervous over the sustainability of the uptrend.”
Market sentiment improved after U.S. President Donald Trump expressed optimism about an upcoming meeting with Chinese President Xi Jinping, saying it could lead to a “good deal” on trade, though he cautioned that talks “may not happen.”
His comments helped calm market nerves and lifted global risk appetite, reducing the need for traditional safe-haven assets such as gold.
Further easing trade tensions, India’s Mint newspaper reported that Washington and New Delhi are close to finalising a trade agreement that would reduce U.S. tariffs on Indian goods to around 15–16% from the current 50%, a move expected to strengthen bilateral economic ties and boost investor sentiment.
Traders await key U.S. inflation data
Attention now turns to the U.S. Consumer Price Index (CPI) report due on Friday, which is expected to offer crucial clues ahead of the Federal Reserve’s interest rate decision next week.
The ongoing U.S. government shutdown has also raised uncertainty in financial markets, disrupting parts of the economic data calendar and complicating the Fed’s policy outlook.
Market participants are watching closely to see whether the inflation data reinforces expectations of an upcoming rate cut — a factor that could lend renewed support to gold prices in the near term.
Other metals trade mixed
Other precious and industrial metals also stabilised after steep declines in the previous session.
Silver prices rose 0.4% to $48.93/oz after tumbling more than 7% on Tuesday, while silver futures gained 1.2% to $48.28/oz. Platinum futures slipped 0.3% to $1,533.90/oz.
Among base metals, benchmark copper futures on the London Metal Exchange were steady at $10,612.95 per tonne, while U.S. copper futures edged up 0.2% to $4.96 per pound.
Outlook
While the recent plunge in gold prices may result in short-term volatility, analysts suggest the broader trend remains underpinned by geopolitical uncertainties, expectations of monetary easing, and continued central bank buying.
However, if global trade optimism persists and U.S. inflation data exceeds expectations, bullion may face additional downward pressure in the sessions ahead.