Mixed Signals from US-China Send Gold Down

Gold prices retreated on Friday, nearly wiping out the gains from the previous day, as investor sentiment shifted in response to conflicting signals over the status of trade negotiations between the US&China. While US President Donald Trump hinted that dialogue was ongoing, China firmly denied any active discussions. The resulting uncertainty unsettled markets and reduced demand for safe-haven assets like gold.

Bloomberg reported that China is considering suspending tariffs on select US imports to ease domestic economic strain. In parallel, Chinese authorities are said to be developing emergency financial and policy tools to counteract external shocks. This mix of potential trade de-escalation and policy readiness prompted volatility across global markets, pushing gold prices lower as risk appetite increased.

Meanwhile, central banks are showing renewed interest in gold. The Swiss National Bank posted a first-quarter profit of 6.7 billion Swiss Francs, driven largely by its gold holdings. Kenya’s central bank, too, announced it is evaluating gold as a reserve asset to reduce reliance on the US dollar, reflecting a broader shift among emerging economies towards diversification.

In China, the rally in gold triggered a surge in retail demand and record trading volumes on the Shanghai exchange. The price spike prompted warnings from regulators about overheating. Nonetheless, the metal remains in demand due to its non-yielding nature and its historic role as a safe store of value during global instability.

While optimism around easing US-China trade tensions has pressured gold prices, the broader macroeconomic picture remains complex. Investors are closely watching for concrete developments, especially as US officials suggest a trade deal with South Korea may be near. In the meantime, geopolitical tensions—such as recent deadly attacks in Ukraine—and strong tech sector earnings are encouraging risk-on behavior. Despite this week’s decline, gold remains near record highs, and its long-term appeal as a hedge against global uncertainty remains intact.