Gold prices slipped for the second time in three days, initially dropping about 0.9% before recovering some losses after the dollar weakened amid reports of US-South Korea discussions on currency policy.
Investors appear to be reacting to two main developments: an unexpected trade truce between the US and China following weekend talks in Switzerland, and US inflation for April coming in below forecasts.
The trade breakthrough has boosted risk appetite, contributing to a rebound in the S&P 500 that has erased its 2025 losses. As investors move back into riskier assets, demand for defensive holdings such as gold has eased.
Still, gold remains one of the year’s stronger performers. Prices are up roughly 20% year-to-date and surged to a record above $3,500 per ounce last month. Lower US inflation raises the possibility of further Federal Reserve rate cuts, a prospect that can support gold because it reduces the opportunity cost of holding a non–yielding asset.
Market participants will likely continue watching developments in trade negotiations, central bank signals and key economic data for cues on the dollar and interest rate expectations—factors that typically drive gold’s near-term direction.