Investing.com - Gold prices fell to a one-week low on Monday, dropping below $1,400, as a trade truce between the U.S. and China boosted risk appetite, dampening demand for the safe-haven precious metal.
Spot gold slid $16.48, or 1.2%, to $1,393.02 by 9:43 AM ET (13:43 GMT), while gold futures for August delivery on the Comex division of the New York Mercantile Exchange, slumped $17.75, or 1.3%, to $1,395.95 a troy ounce.
The U.S. and China agreed to restart trade talks after U.S. President Donald Trump pledged to hold off on the implementation of new tariffs and also ease restrictions on tech company Huawei in order to reduce tensions with Beijing. China meanwhile agreed to make unspecified new purchases of U.S. farm products and return to the negotiating table.
The pause in the escalating conflict boosted risk appetite, sending global equities higher and dampening demand the appeal of safe-haven assets such as gold.
Ole Hansen, head of commodity strategy at Saxo Bank, said that the correction does not change his view on gold.
“We view the latest drop in gold as a healthy correction following four weeks of heavy buying,” Hansen explained in a note.
This strategist said there are reasons for caution as the third quarter kicks off.
“One of them being our belief that the low point in global growth is still ahead of us, not behind us,” he said. “On that basis, we view some of the recent headwinds as being temporary and unlikely to trigger a fundamental shift in the short to medium term outlook for gold.”
In other metals trading, silver futures fell 0.4% to $15.227 a troy ounce by 9:51 AM ET (13:51 GMT).
Palladium futures gained 0.3% to $1,542.20 an ounce, while sister metal platinum advanced 0.4% to $844.45.
In base metals, copper lost 0.3% to $2.705 a pound.