Gold Declines As U.S.-China Trade Tension Shows Signs Of Easing

(RTTNews) - Gold prices fell sharply on Wednesday, extending yesterday's losses, amid emerging positive signals on the recently renewed U.S.-China trade friction. Notably, gold's recent spectacular rally halted yesterday, when it nosedived more than 5%.

Front Month Comex Gold for October delivery tumbled by $43.30 (or 1.06%) to $4,044.40 per troy ounce.

Front Month Comex Silver for October delivery moved up incrementally by 1.10 cents (or 0.02%) to $47.461 per troy ounce.

On October 9, China expanded its restrictions on rare-earth metals and minerals exports. With huge reserves and a near-monopoly in rare earth processing, China increased the number of elements in its restricted export list.

Angered by China's move, Trump threatened a new 100% tariff on China, raising the cumulative tariffs to nearly 155%.

Earlier, both nations had levied "special port charges" on each other's vessels entering their ports. China also halted buying soybean from the U.S. completely.

Tension between two of the world's largest consumers raised concerns, prompting investors to move to safe-haven metal buying.

Last weekend, Trump dramatically changed his hardline stance on China. While acknowledging high tariffs on China are unsustainable, Trump also accepted China already pays a tremendous amount of money to the U.S. In addition, he reaffirmed that he would meet Chinese President Xi Jinping as planned in South Korea.

Easing of U.S.-China friction brought cheer to markets and the yellow metal lost its sheen due to the heavy sell-off yesterday.

Plans were in place for a face-to-face meeting between U.S. President Donald Trump and Russian President Vladimir Putin in Budapest, Hungary to discuss means to end the drawn-out Russia-Ukraine war. Ukraine President Volodymyr Zelenskyy also expressed willingness to join the meeting.

The news raised expectations of peace returning to Europe and with it, Russia trading smoothly with other countries.

Yesterday, in a sudden reversal of events, Trump stated that he neither wanted a "wasted meeting with Putin" nor wanted to waste time. Without elaborating on the real reasons for this shift, Trump stated that his administration will be notifying over the next few days as to what was going on.

Officially, the Russian side did not offer any explanation either for the cancellation. Russia had been long calling that for any "peace talk" to succeed, Ukraine should de-align from Europe and put off its plans to join NATO.

European Union nations supporting Ukraine have unified on monetizing frozen Russian assets held in Europe (around $250 billion) to aid Ukraine as U.S. finances to Ukraine are dwindling. Italy has stressed the need to take such measures only under the legalities of International Law.

However, the yellow metal did not benefit much from the U.S. distancing itself from Russia-Ukraine conflict.

According to analysts, gold's recent rally was primarily due to traders' "Fear Of Missing Out" syndrome, brisk buying by central banks, and more inflow into Exchange-Traded Funds.

Gold is now seeing a "cool off" period due to profit-booking.

The U.S. government shutdown has entered day number 22.

With the closure rolling over to a fourth week, today the Senate is expected to vote again for a twelfth time on a House-passed bill to reopen the government.

However, not much is expected, as Trump yesterday turned down the request of Democratic leaders to negotiate on healthcare demands, insisting that he intends to discuss only if the government is allowed to reopen.

The U.S. Federal Reserve is now crippled from getting access to key economic data.

Recent private-sector data indicated that hiring has been modest with no major change to the job market.

The Bureau of Labor Statistics has announced that it will publish the September 2025 Consumer Price Index on October 24.

A Reuters poll revealed that economists are predicting two rate cuts this year by the U.S. Fed, an increase from the earlier forecasts of just one rate cut.

Out of 117 economists surveyed, 115 expect a 25-basis-point cut in October with two predicting a 50-basis-point cut in December. The majority, 71%, anticipate another rate reduction in December.