By Anushree Mukherjee
(Reuters) – Gold fell on Wednesday as de-escalation in U.S.-China trade tensions weakened safe-haven demand, while markets eyed another set of inflation data to assess the Federal Reserve’s policy path.
Spot gold fell 0.5% to $3,231.10 an ounce, as of 0643 GMT. U.S. gold futures eased 0.4% to $3,235.30.
“Positive developments in the U.S. trade policy (are) diminishing the appeal of gold in the short-term,” Capital.com’s financial market analyst Kyle Rodda said.
“I think that if we see continued progress in trade negotiations and deals being done between the US and its trading partners, gold can pull back further. $3,200 is a pretty critical level of support.”
The U.S. will cut the “de minimus” tariff for low-value shipments from China to 30%, according to a White House executive order and industry experts, further de-escalating a potentially damaging trade war between the world’s two largest economies.
On Monday, U.S. President Donald Trump said he does not see tariffs on Chinese imports returning to 145% after the 90-day pause, adding that he believes Washington and Beijing will have a deal.
Meanwhile, the U.S. Department of Labour said the consumer price index increased 0.2% in April, while economists polled by Reuters expected a 0.3% rise following a 0.1% decline in March.
Traders await the Producer Price Index data, due on Thursday, for cues about the Fed’s interest rate trajectory. The market is expecting 53 basis points of rate cuts this year, starting September.
Gold, traditionally viewed as a hedge against inflation, also tends to thrive in a low-interest rate environment.
“Our technical analysis suggests that prices can take support near $3,200/oz, but a break below this could see prices falling in the range of $3,000–$3,145/oz,” ANZ said in a note.
Spot silver eased 0.4% to $32.76 an ounce, platinum was up 0.6% at $994.54 and palladium lost 0.3% to $953.68.
(Reporting by Anushree Mukherjee in Bengaluru; Editing by Sumana Nandy, Janane Venkatraman and Rashmi Aich)
