Gold prices dropped early Monday as signs of easing trade tensions between the United States and China weighed on demand for the precious metal as a safe-haven asset. Spot gold fell by as much as 2.3% in early Asian trading, later settling around 2% lower at $3,277.2 per ounce as of 6:57 AM in Singapore.

The dip follows a 2.6% weekly gain, driven largely by market uncertainty ahead of the latest round of trade negotiations between the world’s two largest economies. After two days of discussions in Switzerland, both the US and China reported “substantial progress” in their efforts to de-escalate the long-running trade war. However, no concrete measures or agreements were announced immediately.

This positive shift in sentiment has cooled the momentum that recently pushed gold to a record high of approximately $3,500 an ounce. The trade conflict had fueled much of gold’s 25% rally this year as investors flocked to safer assets amid market volatility.

At the same time, geopolitical tensions appeared to ease elsewhere. Investors are now closely watching the situation in Eastern Europe, where former US President Donald Trump is backing a renewed push for peace in Ukraine. Ukrainian President Volodymyr Zelenskiy has publicly challenged Russian President Vladimir Putin to return to the negotiating table this week, potentially opening a new path toward resolution.

While gold’s role as a hedge against geopolitical instability may weaken if diplomacy gains traction, support for bullion remains. Strong central bank demand and heightened Chinese retail speculation continue to underpin the metal’s broader strength.

Meanwhile, the broader precious metals market showed mixed movement. Silver prices edged lower, while both platinum and palladium registered gains during the same trading session.

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