Gold prices edged lower for the second time in three days, initially falling by 0.9% before recovering somewhat due to a weakening dollar following reports about US-South Korea currency policy discussions.
The decline comes as investors react to two key factors: the unexpected trade truce between the US and China following weekend talks in Switzerland, and lower-than-expected US inflation figures for April.
The trade breakthrough has reinvigorated risk appetite, helping the S&P 500 recover all its 2025 losses as investors shift away from defensive assets like gold.
Despite this recent pullback, gold has performed strongly this year, rising about 20% and reaching a record price above $3,500 per ounce last month. Lower US inflation could support additional Federal Reserve rate cuts, which typically makes non-interest bearing gold more attractive to investors.