Gold prices saw a slight dip at the opening of the Dubai markets on Wednesday, following a boost in global market sentiment fueled by developments in the ongoing US-China trade negotiations.
According to the Dubai Jewellery Group, the price of 24-karat gold dropped to Dh388.25 per gram, while other variants followed suit.
The 22-karat, 21-karat, and 18-karat types opened at Dh359.75, Dh345, and Dh295.5 per gram, respectively, signaling a reduction in demand for the precious metal.
The global spot price of gold was trading at $3,226.59 per ounce, a 0.5% decline from the previous session. This drop came amid growing optimism surrounding a temporary trade deal between the United States and China.
Vijay Valecha, Chief Investment Officer of Century Financial, attributed the fall in gold prices to improved market sentiment following the news of a US-China agreement.
“The reduction in tariffs between the two countries has given rise to improved risk appetite in the markets, causing a reduction in demand for gold, which is traditionally viewed as a safe-haven asset,” Valecha explained.
As part of the temporary trade deal, the US and China agreed to reduce certain tariffs, with the US planning to cut “de minimis” tariffs on Chinese shipments from 120% to 54%. However, a minimum flat fee of $100 will remain in place, ensuring a degree of caution remains in the trade relationship.
While the announcement of a trade deal temporarily alleviated market concerns, the potential for further geopolitical tensions continues to keep investors on edge.
Ukrainian President Volodymyr Zelensky recently indicated his willingness to meet with Russian President Vladimir Putin, sparking discussions about possible peace talks in Turkey. This comes after US President Donald Trump urged Zelensky to accept Putin’s offer of negotiations.
Such developments, along with signs of escalating tensions, could push gold prices higher, as investors may flock to the precious metal to hedge against potential risks. Historically, periods of heightened geopolitical uncertainty have driven investors to seek the safety of gold, often boosting its price.
Despite the optimism surrounding the US-China trade deal, market participants are keeping a close watch on ongoing developments in global geopolitics. Any major escalation, particularly in Ukraine or other global hotspots, could trigger renewed demand for gold as a hedge against rising risks.
For now, the gold market is navigating a delicate balance. While trade talks between the US and China have brought some relief to global markets, the situation remains fluid, and any change in sentiment could quickly swing gold prices in either direction.
As always, investors are advised to stay informed and be prepared for volatility in the precious metals market as geopolitical and economic conditions evolve.
This article was created using automation technology and was thoroughly edited and fact-checked by one of our editorial staff members