Sharp Drop on Monday
• Spot gold plunged 2.7%, reflecting a dramatic risk-on shift after the US and China announced a 90-day pause in their trade war.
• The yellow metal is now trading around $3,250 per ounce, attempting to stabilize after Monday’s fall.

US-China Tariff Truce Sparks Risk Rally
• The US slashed tariffs on Chinese goods from 145% to 30%, and China reciprocated by lowering tariffs on US goods from 125% to 10%.
• This surprise de-escalation reduced geopolitical uncertainty, leading investors to rotate into equities and riskier assets, especially in Big Tech.

Stronger Dollar & Rising Yields Weigh on Gold
• The Bloomberg Dollar Spot Index surged 1% Monday, its largest jump since the post-election rally in November.
• Treasury yields also climbed, as inflation expectations shifted and the demand for bonds fell.
• Both developments reduce gold’s appeal as it pays no yield and is priced in USD.

Fed Rate Cut Expectations Reset
• Traders now expect only two rate cuts from the Federal Reserve in 2025, down from earlier projections.
• This reflects a reassessment of inflation trends and a more hawkish outlook — bad news for non-yielding assets like gold.

Analysts Expect Sideways Movement for Now
• While tensions have eased, uncertainty remains around the final outcome of negotiations.
• Gold is expected to consolidate between $3,150 and $3,350 per ounce in the near term.

Despite Pullback, Gold Remains +25% YTD
• The metal has had a strong year overall, driven by geopolitical fears, sticky inflation, and central bank buying.
• Monday’s selloff may prove temporary, especially if US-China talks stall or risk assets falter.

Also Notable:
• Silver and Platinum posted mild gains
• Palladium was little changed
• The broader commodity complex remains sensitive to political developments and inflation data

What’s Next?
 Gold’s retreat may reflect short-term optimism, but long-term concerns still linger. Traders should monitor upcoming US CPI data, Fed signals, and the durability of the trade truce. A flare-up in tensions or weak inflation prints could bring gold roaring back.