Gold Price Sinks 3% as S&P Jumps on Ceasefire in US-China Trade War
Monday, 5/12/2025 15:21
The PRICE of GOLD tumbled more than 3% on Monday from last Friday's record-high weekly close, contrasting with a jump in global stock markets, after the US and China agreed to de-escalate their 'trade war' by reducing import tariffs on each others goods for 90 days,
writes Atsuko Whitehouse at BullionVault.
India and Pakistan also agreed a ceasefire in their conflict over Kashmir, while Kurdish separatist group the PKK said it is disbanding, helping Turkey's BIST100 share index jump 3.1%.
Gold in contrast lost over $100 per Troy ounce during Asian hours today, dropping as much as 3.2% from
Friday's record-high weekly close of $3324 for bullion settled in London.
Bottoming at $3208 − the lowest spot market price since 1st May − the gold price then rallied to $3240 by the time the US stock market opened.
"The de-escalation of tensions between China and the US is reducing the demand for safe haven assets like gold," says Giovanni Staunovo, analyst at Swiss bank and London bullion clearer UBS.
Having plunged by 12.1% following
Trump's 2nd April 'Liberation Day' tariffs, New York's S&P500 index of the largest US corporate stocks had already recovered that drop by Thursday last week, rising a further 2.7% on Monday and almost erasing the last of 2025's previous losses.
US Treasury bond prices also traded close to dead-flat for the year to date on Monday, as tracked by the popular TLT ETF of long-dated US government debt.
New York gold Comex futures contracts meantime trimmed their 2025 jump to 22.7%, slipping like London bullion from Friday's new record weekly close.
Asia-Pacific markets rose overnight following the US-China trade war ceasefire, led by a 1.2% gain in mainland China's CSI 300 index.
Shares in India meanwhile jumped nearly 4% and Pakistan's stock market rallied more than 9% after New Delhi and Islamabad agreed a ceasefire in the 2 nuclear powers' worst fighting in half-a-century around the disputed region of Kashmir.
"The latest developments could become a boon for risk-correlated assets and currencies and a blow to safe-haven currencies like the Yen, Swiss Franc and even the Euro," says Valentine Marinov, head of G-10 FX research and strategy at French bank Crédit Agricole.
The Dollar index − a measure of the US currency's value versus major peers − rose 1.5% to a one-month high on Monday, trimming its year-to-date loss to 6.2%,
Ten-year US Treasury yields − a benchmark rate for government as well as many finance and commercial borrowing costs − edged 2 basis points higher to the costliest in a month at 4.45% per annum.
The odds of a June cut to overnight interest rates by the US Fed − seen as an 80% likelihood just one month ago − have now fallen below 10%, according to betting tracked by the CME derivatives exchange's FedWatch tool.
Gold prices on the Shanghai Gold Exchange today fell 2.5% to ¥766 per gram, the lowest in 4 weeks, but continued trading above London quotes in Dollar terms, incentivizing new bullion imports into the precious metal's No.1 consumer market.
While
the Shanghai gold premium sank from 12-month highs above $50 towards $20 per Troy ounce on Monday, that's still more than twice the typical level.
London gold priced in Euros today dropped 1.8% to a one-week low of €2902, while
the UK gold price in Pounds fell 2.1% to a one-week low of £2446 per ounce.
Prices for silver − primarily driven by industrial demand, which finds nearly 60% of annual use − fell 1.3% to $32.29 per ounce, trimming the gray metal's year-to-date gain to 10.9%.
Ukraine's President Zelenskyy meanwhile challenged Russian President Putin to meet him in person for peace talks in Istanbul on Thursday.
Seemingly backed by improving support from the US Trump administration, Zelenskyy's challenge follows Putin's rejection of a 30-day ceasefire proposal made by Ukraine and its European allies over the weekend.
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