The first trading session of the week began with gold prices falling in major markets such as Australia, Hong Kong (China) and London (UK). August gold contracts initially lost $26.6 to $3,320 an ounce.
It is noteworthy that gold prices fell even as the US dollar also fell, a usual reversal, showing that investors are expecting the US and China to resume trade negotiations.
The focus of the diplomatic initiative is high-level meetings in London between US Treasury Secretary Scott Bessent and Chinese Deputy Prime Minister He Lap Phong. The two sides are trying to strengthen the agreement last month, including agreeing to temporarily postpone the imposition of a tax exceeding 100% on bilateral imported goods for 90 days.
The start of negotiations has caused gold's traditional safe haven role to decline, as the financial market sees this as a positive step in resolving economic uncertainties that have supported gold prices in recent times.
The economic pressures driving these urgent negotiations are clearly demonstrated through China's worsening trade data. It is known that China's export growth in May fell to a three-month low, while exports to the US fell by 34.5% - the sharpest decrease since February 2020.
This decline clearly shows the economic losses that both countries have suffered due to the prolonged trade war, and at the same time shows the urgency of making progress in the current dialogue.
However, market sentiment has changed significantly throughout the trading session. After falling to a daily low of $3,313.10 an ounce, gold prices rebounded strongly.
By 14:10 Eastern time (ET), the price of the August contract had increased by 22.80 USD (equivalent to 0.68%) to 3,356.50 USD/ounce, with the domestic fluctuation reaching more than 43 USD/ounce.
This reversal shows that although the market was initially caught up in diplomatic optimism, investors have since returned to a more cautious stance.
The market's reaffirmation of gold's safe haven role reflects the awareness that there is still a lot of uncertainty about the substantial progress in US-China trade relations, despite the symbolic significance of resuming the dialogue. The scale of the economic damage that has occurred, especially the collapse in China's exports, has further increased investors' concerns about the complexity of the thorough resolution of this conflict.
The financial picture of the day also reflected the change in market sentiment. The continued weakness of the US dollar as trade negotiations began has further supported the increase in gold prices in the afternoon, while US Treasury bond yields decreased over the entire term.
These synchronous developments show that the currency and bond markets are preparing for policy adjustment if negotiations are successful, while still acknowledging the major economic challenges that force the two countries to enter a high-level dialogue.
trading developments on Monday showed a complex link between international politics and the precious metals market, where initial optimism about diplomacy could quickly turn into safe-haven demand as investors carefully consider the potential economic pressures that are fueling these negotiations.
