GoldL reddit: Gold rate dipped beneath $3,200 per ounce, marking the first time since early April.

GoldL reddit: Gold rate dipped beneath $3,200 per ounce, marking the first time since early April.

Gold takes a tumbleGold's value plunged to $3175.03 immediately, but by 17:48 Moscow time, the declining trend eased, with gold trading at $3190 (-1.9%). Gold futures for June delivery on the Chicago Mercantile Exchange sit at $3185.9 (-1.9%).

According to Reuters, gold's decrease is due to reduced demand for safe-haven assets. The easing of trade tensions between the US and China has diminished fears of a potential global recession, leading investors to seek riskier ventures.

The US slashed tariffs on China from 145% to 30%, including the basic "mutual" tariff of 10% and 20% that were previously imposed to curb fentanyl supplies. In response, China decided to cut tariffs on US goods from 125% to 10%.

Ole Hansen, head of the commodity strategy department at Saxo Bank, explained that, with Washington and Beijing's agreement, the stock market experienced a swift rise. Hansen believes that, in the short term, this market dynamics has diminished investor interest in gold as a safe-haven asset. He predicts the price of gold could plummet to $3165.

Last month, gold prices soared, surpassing the $3500 mark per ounce due to fears of an intensifying trade war, weakening dollar, and criticism from US President Donald Trump towards the Fed.

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The gold market is experiencing a decline due to several factors:

Factors Driving Gold's Fall:1. Reduced Safe-Haven Demand: The US-China trade truce has decreased worries of a global economic contraction, making gold less attractive as a safe-haven asset. As a result, investor interest in gold has waned, pushing them toward riskier stocks and other investments[2][3].

1. Increased Risk Appetite: Positive expectations for direct dialogue between the US and China have bolstered investor optimism, causing a market-wide risk-on attitude[2][3].
2. Fed Rate Expectations: The probability of aggressive Federal Reserve rate cuts has diminished, as traders now anticipate only 50 basis points in reductions for the year. This has driven US Treasury yields up, adding pressure to gold prices[2].
3. US Dollar Effect: Though the US Dollar hasn't strengthened significantly despite favorable bond yields, its current strength can put downward pressure on gold prices[2][3].
4. Investment Trends: Speculators in COMEX gold futures have been net sellers, contributing to the decline in gold prices. Simultaneously, investment demand for bullion-backed ETFs has decreased, but Asian buyers and central banks continue to prop up gold prices[3].

Its future price movements may be influenced by various factors, such as:- US Economic Data: Important economic data, including the Producer Price Index, and speeches from key Fed officials, could impact rate cut expectations and impact gold prices[2].- Geopolitical Developments: Significant geopolitical events may sway investor sentiment and gold demand[3].- Commodity Market Trends: Performance of other commodities, like silver, and overall market risk appetite will also play a part in determining gold's future price[3].

In light of these factors, gold prices might remain volatile, with potential support around the $3,200 level seen recently[3]. However, drastic shifts in economic or geopolitical circumstances could alter this trajectory.

The declining trend in the gold market is primarily due to reduced demand for safe-haven assets following the US-China trade truce, causing investors to divert their attention towards riskier ventures in the finance and business sectors. Additionally, with expectations of smaller Federal Reserve rate cuts and a stronger US Dollar, the investing industry could further impact the price of gold, potentially pushing it lower.

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