FX.co ★ Gold Falls as Trade Tensions Ease

Gold prices declined to approximately $3,240 per ounce on Wednesday, erasing gains from the previous session. This downturn is attributed to a reduction in gold's safe-haven appeal, following the easing of trade tensions between the United States and China. Both nations agreed to a temporary reduction in tariffs on each other's products over a 90-day period, alleviating concerns about the prolonged impact of their trade conflict. However, gold did receive some support after the annual inflation rate in the U.S. eased to 2.3% in April, marking the lowest point since February 2021 and falling short of market predictions of 2.4%. This data supports non-yielding metals like gold by potentially providing the Federal Reserve with more flexibility to implement interest rate cuts. Additionally, gold exchange-traded funds (ETFs) experienced net inflows of 115 tons in April, marking the fifth consecutive monthly increase and the most substantial rise in over three years. The increase was primarily driven by an influx of nearly 65 tons from China, as reported by the World Gold Council.