Gold prices dropped 1.2% to $3,388.49 an ounce on Wednesday after markets reacted positively to news that U.S. and Chinese officials will meet in Switzerland this weekend to discuss tariffs.
The talks will bring together U.S. Treasury Secretary Scott Bessent and Chinese economic official He Lifeng. The meeting follows a round of retaliatory tariffs imposed by both countries last month, a development that had previously pushed investors toward safe-haven assets such as gold.
With that diplomatic progress priced in, traders are turning their attention to the Federal Reserve’s policy announcement due at 1800 GMT. The consensus expectation is that the Fed will hold interest rates steady.
Markets will closely scrutinize any guidance about the timing of future rate cuts. Lower interest rates typically support higher gold prices, so any signal from the Fed that cuts are likely would be bullish for bullion. At present, market-implied odds of a June rate cut stand near 30%.
Beyond central bank policy and geopolitics, other factors could influence gold’s direction in the near term, including U.S. economic data, inflation readings, and shifts in investor risk appetite. For now, the combination of improved U.S.-China dialogue and steady-rate expectations appears to have reduced some of the safe-haven demand that had been underpinning gold.