Gold falls as 'positive' US-China talks erode safe-haven appeal

Synopsis

Gold prices experienced a decline on Monday as positive signals emerged from U.S.-China trade discussions, diminishing investor apprehension and consequently reducing the appeal of gold as a safe-haven asset. The U.S. and China indicated progress in trade negotiations, potentially leading to a reduction in the U.S. trade deficit and the establishment of a new economic dialogue forum.

Gold prices slipped on Monday as U.S.-China trade talks ended on a positive note, easing investor anxiety and denting demand for the safe-haven asset.

FUNDAMENTALS

* Spot gold fell 1.1% to $3,286.86 an ounce as of 0014 GMT. U.S. gold futures lost 1.6% to $3,291.60.

* The U.S. and China ended high-stakes trade talks on a positive note on Sunday, with U.S. officials touting a "deal" to reduce the U.S. trade deficit, while Chinese officials said they had reached "important consensus" and agreed to launch another new economic dialogue forum.

* Chinese Vice Premier He Lifeng said a joint statement would be released in Geneva on Monday. Vice Commerce Minister Li Chenggang said it would contain "good news for the world."

* The U.S. and China imposed tit-for-tat tariffs on each other last month, triggering a trade war that fuelled fears of a global recession.

* America will be left with higher tariffs once the dust settles from U.S. President Donald Trump's trade negotiations, a majority of the current and former Trump advisers Reuters spoke to said.

* On Friday, Cleveland Federal Reserve President Beth Hammack said the Fed needs more time to see how the economy responds to Trump's tariffs and other policies before figuring out the right response.

* Last week, the Fed held interest rates steady and warned of rising inflation and unemployment risks.

* Gold, traditionally seen as a hedge against economic and political uncertainties, thrives in a low-interest rate environment.

* Meanwhile, the Indian military sent a "hotline message" to Pakistan on Sunday about violations of a ceasefire agreed upon this week and informed it of New Delhi's intent to respond if it was repeated, a top Indian army officer said, while the Pakistan military's spokesman denied any ceasefire violations.

* Spot silver eased 0.1% to $32.65 an ounce, platinum rose 0.4% to $998.65 and palladium firmed 0.5% to $980.41.

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