Gold prices have rebounded slightly after experiencing a sharp decline below $US4000 an ounce. The previous drop was triggered by positive developments in trade negotiations between the United States and China, which diminished the demand for safe-haven assets like gold. Negotiators from Washington and Beijing announced they had reached several agreements regarding tariffs and export controls, further impacting market sentiment.
Treasuries experienced a decrease even as traders maintained expectations that the Federal Reserve would implement looser monetary policies this week. The increase in yields placed downward pressure on the demand for gold, which does not offer interest payments. Following a rapid climb, gold has retreated significantly from its record high of over $4380 an ounce recorded last Monday.
Despite the recent pullback, gold remains more than 50 per cent higher year-to-date. Support for the precious metal has been driven by central bank purchases and debasement trades. According to Chris Weston, head of research at Pepperstone, leveraged traders securing profits can cause crowded positions to unwind rapidly.
As of 7.54am in Singapore (10.54am AEDT), spot gold had risen 0.5 per cent to $4000.81 an ounce. Despite this increase, Weston noted that identifying the bottom remains challenging amid lower lows and elevated futures volumes on down days.
