[Gold Market Review] Easing of U.S.-China Relations and Rapid Decline in Risk Aversion Sent Gold Prices Plunging $131: How to Trade
#黄金收评 #24K99讯 Gold plummeted and fell below 4,000 US dollars/ounce on Monday (10/26) due to progress in trade talks between China and the US, reducing safe-haven demand for a portion of gold. The US Federal Reserve’s interest rate decision this week is another priority that investors are waiting for.
Spot gold closed down $131.28, or 3.19%, to $3981.37 per ounce on Monday; the intraday price of gold fell to 3970.81 US dollars/ounce, the lowest since October 10.
David Meger, head of Metal trading at High Ridge Futures, said, “A potential trade agreement between China and the US is forecasting gold, etc.Safe haven assetsThere will be less demand.”
Negotiators from the two major economies proposed a framework agreement on Sunday after holding economic and trade negotiations in Malaysia, including the suspension of US tax increases.
FXStreet Analyst Christian Borjon Valencia pointed out that due to the easing of tension in the Sino-US trade war, risk appetite improved. On Monday, the price of gold fell below 4,000 US dollars/ounce for the first time since mid-October, hitting a daily low of 3,971 US dollars/ounce. However, expectations that the Federal Reserve will restart the easing cycle may prompt investors to buy gold.
The market believes that the probability that the Fed will cut interest rates by 25 basis points this week is as high as 97%. Gold itself doesn’t grow, and generally performs well in a low interest rate environment.
On Sunday, the Sino-US economic and trade teams concluded two days of negotiations in Kuala Lumpur, the capital of Malaysia. After the talks ended, US Treasury Secretary Bessent said in an interview with the US media that after two days of talks in Kuala Lumpur, the two sides reached a “very substantial framework agreement” and that the US “will no longer consider” imposing 100% tariffs on China.
US Bloomberg said that US Trade Representative Greer said at the press conference that the trade negotiations between China and the US were fruitful and involved various topics, “talking about extending the suspension period of equal tariffs, but also about rare earths.” The two sides are discussing the final details of a trade agreement proposal, which can almost be submitted to the leaders of the two countries for review.
US President Trump told reporters while attending the ASEAN summit in Kuala Lumpur on Sunday that he is confident that “a very comprehensive agreement” can be reached with China. Trump said on Monday that the US and China are about to “reach” a trade agreement.
FXStreet senior Analyst DHWani Mehta pointed out that during the two-day talks in Malaysia, China and the US reached initial consensus on issues such as export controls, fentanyl, and shipping taxes, and the market is once again optimistic about the Sino-US trade agreement. This may be the reason for the latest drop in gold prices.
Marc Chandler, chief market strategist at Bannockburn Global Forex, said: “The market is a bit excited right now.” He pointed out that global stock markets are rising and gold prices are falling.
Chandler pointed out that the improvement in market sentiment was mainly boosted by three developments. “It appears that China and the US have retreated from the brink of conflict; the US has reached foreign trade agreements or structures with some East Asian countries; and the impressive performance of Argentine President Millet.” Millet’s political party won a big victory in the upcoming Chinese parliamentary elections, and voters gave him a clear mandate to continue carrying out economic reforms.
The price of gold has recently fallen sharply
The price of gold rose to an all-time high of 4381.21 US dollars/ounce on October 20, but after the trade tension between China and the US showed signs of easing, it plummeted 3.2% last week.
CPM Group managing partner Jeffrey Christian said that in addition to technical Ask, gold is falling further because trade tension has abated. This factor drove the price of gold from 3,800 US dollars/ounce to 4,400 US dollars/ounce in the first three weeks of October.
Although most Analyst and investors believe that gold will continue to rise further, and may even rise to 5,000 US dollars/ounce, some Analyst doubt how long the recent sharp rise in gold prices will last.
Kaitou’s macro Analyst forecast the gold price adjustment on Monday, believing that it will fall back to 3,500 US dollars/ounce by the end of 2026.
They said, “The 25% increase in gold prices since August is more difficult to find a reasonable explanation than the sharp rise a while ago.”
Gold trading analysis
#黄金Technical analysis#FXStreet分析师Christian Borjon Valencia pointed out that the price of gold fell below 4,000 US dollars/ounce on Monday and hit 3,971 US dollars/ounce at one point.Relative strength index(RSI) It is still bullish and is about to turn Put. The price of gold is likely to consolidate in the range of 3,900 to 4,000 US dollars/ounce in the short term.
Valencia said that as the daily price of gold closes below $4,000 per ounce, bears may target the low of $3,944 per ounce on October 9. Once it falls below the latter, the price of gold will target the October low of $3,899 per ounce and then test for 50 dayssimple moving average(SMA) $3767 per ounce.
(Spot gold daily chart source: FXStreet)
On the other hand, Valencia added that if the gold price rebounds above $4,000 per ounce and remains above that level, the next resistance level will be the $4,100 per ounce mark, followed by the October 22 high of $4,161 per ounce.
