Recent trade agreements between the United States and two of its key partners—China and the United Kingdom—have had a significant impact on global markets. One of the most notable outcomes has been the strengthening of the U.S. dollar and a decline in demand for safe-haven assets like gold. These developments have ushered markets into a new phase of reassessment and shifting investor expectations.
Gold Prices Decline After U.S.-China Trade Agreement
Following the announcement of a trade agreement between the U.S. and China, the gold futures contract for June 2025 dropped by 2.62% (a $87.30 decline), closing at $3,241.80 per troy ounce. This decline marks a 50% retracement from the all-time high of $3,509.90 reached on April 22.
Analysts are now closely watching two key support levels: $3,176.50 as the 61.8% Fibonacci retracement level, and $3,157.70, which represents the 50-day moving average. According to experts, the main driver behind this gold pullback was the easing of trade tensions following recent negotiations in Geneva. As part of the agreement, the U.S. will reduce tariffs on most Chinese imports from 145% to 30%, while China will cut its tariffs on American goods from 125% to 10%.
Under these conditions, gold loses some of its appeal as a safe-haven asset. Trade tension de-escalation typically boosts market confidence and economic stability, both of which reduce the need for hedging through gold. A stable economy and controlled inflation may continue to put downward pressure on gold prices, despite the metal’s strong multi-year rally.
Stronger U.S. Dollar Weighs on Gold
Alongside the decline in gold, the U.S. Dollar Index (DXY) surged by 1.37%, reaching 111.63. Roughly half of gold’s price drop is attributed to the strengthening of the dollar, given that gold is globally priced in USD. This creates an inverse relationship between the two. The other half of the drop was driven by aggressive selling of gold futures by market participants.
As these new trade policies are set to take effect starting Wednesday, investors and analysts will be closely monitoring their influence on economic indicators, inflation trends, and central bank positioning—all of which are key factors in determining the direction of gold prices throughout the remainder of 2025.
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