Gold falls as potential US-China trade deal dents safe-haven demand

Gold prices fell 2% on Monday, as hopes of easing U.S.-China trade tensions lifted risk appetite for equities, while investors awaited major central bank meetings this week for rate cut cues.

Spot gold was down 2% at $4,029.69 per ounce as of 1122 GMT. Prices hit a record high of $4,381.21 on October 20, buoyed by rising bets for U.S. rate cuts, and geopolitical and economic uncertainties, but have since fallen more than 5%.

U.S. gold futures for December delivery lost 2.3% to $4,042.80.

Asian stocks surged as signs of a detente in China-U.S. trade tensions buoyed risk appetite in a strong start to a week that will be headlined by central bank meetings and megacap earnings.

"A possible trade deal between the U.S. and China is supporting risky assets and weighing on gold, but we should also remember that potentially lower tariffs will allow the Federal Reserve to cut rates further," UBS analyst Giovanni Staunovo said.

The U.S. and China are set to "come away with" a trade deal, U.S. President Donald Trump said, a day after top officials of the two countries hashed out a framework for Trump and Chinese President Xi Jinping to decide on during their upcoming meeting in South Korea.

Reuters