Gold Prices Slip as Trade War Tensions Ease: Market Update April 28, 2025

By: Payel

Published on: Apr 29, 2025

In a notable shift for global commodity markets, gold prices edged lower on Monday as optimism surrounding the ongoing trade discussions between the United States and China signaled a de-escalation of geopolitical tensions. This easing of hostilities reduced the demand for traditional safe-haven assets like gold, while a stronger US dollar further compounded the downward pressure on bullion prices.

 Gold Market Analysis: A Retreat From Safety

Gold futures for June delivery dropped by 0.2% to $3,292.00 per ounce, and spot gold prices slipped 0.8% to $3,309.68 at the time of reporting. These movements reflect a broader sentiment shift in global markets as fears of an intense US-China trade war began to subside.

“Financial markets, and risk assets in particular, are feeling slightly better about the tariff picture compared to earlier this month,” said Tim Waterer, Chief Market Analyst at KCM Trade.

The diminishing sense of urgency among investors to seek safe assets was largely influenced by positive commentary from the White House, suggesting a potential breakthrough in trade negotiations. The prospect of a resolution reduced the attractiveness of gold, a typical refuge during volatile times.

 Dollar Strength Weighs on Gold

Another key contributor to gold’s decline is the resurgent US Dollar. The US Dollar Index (DXY), which tracks the performance of the greenback against six major global currencies, rose by 0.3% to 99.74. A stronger dollar makes gold more expensive for foreign investors, thereby reducing its appeal on the global stage.

“We think the dollar is overvalued,” noted analysts at Goldman Sachs, adding that the high level of US assets held by foreign investors might deter future accumulation.

With the dollar continuing to display strength, gold prices may face further resistance in the short term unless geopolitical tensions spike again or inflation data surprises the market.

 Forex Market Snapshot: Pound and Euro Stay Flat

GBP/USD and GBP/EUR Movements

In the currency markets, the British pound remained flat against both the US dollar and euro, with GBP/USD trading at $1.3305 and GBP/EUR at €1.1712. After facing losses in the previous trading session, the pound's muted performance reflects uncertainty tied to both global economic conditions and domestic UK fiscal policy.

“Despite the dollar’s recovery, long-term forecasts suggest room for correction,” said strategists at Goldman Sachs, highlighting the US currency’s elevated valuations and geopolitical exposure.

The subdued currency activity comes as traders await further clarity on both the US-China trade talks and economic indicators from the Eurozone and the UK.

 Oil Prices Tick Up, But Outlook Remains Clouded

The oil market saw modest gains early Monday as traders remained cautiously optimistic about demand recovery. Brent crude futures were up 0.1% to $65.88 per barrel, while US West Texas Intermediate (WTI) rose 0.2% to $63.13 per barrel.

However, the upward trend was limited due to several headwinds:

• OPEC+ supply uncertainty: Member nations are set to meet on May 5, with discussions likely focusing on a second consecutive month of potential output hikes.


• US production surge: Rising domestic output continues to challenge bullish oil sentiment.


• Iran nuclear talks: Ongoing discussions in Oman between Iran and the US could ease sanctions and reintroduce Iranian oil to the global market.

“Traders are cautious as they await the May 5 OPEC+ meeting,” noted Michael McCarthy, CEO of Moomoo Australia. “The absence of breaking news has allowed oil to drift slightly higher.”

Last week, both Brent and WTI prices dropped over 1% amid concerns of oversupply and slowing demand, particularly in light of recent bearish economic forecasts tied to global trade friction.

 Market Impacts and Broader Financial Trends

Despite uncertainty in commodities, stock markets presented a mixed but mostly optimistic outlook. The FTSE 100 index edged higher to 8,447.17 points, buoyed by strong corporate earnings and stabilizing investor sentiment.

These movements illustrate how investor confidence is gradually returning, as some major financial risks—especially trade-related—appear to be softening. However, analysts caution that the picture remains highly fluid, with global demand projections still “blurry” due to multiple overlapping macroeconomic factors.

 Key Takeaways for Investors

• Gold: Facing downward pressure due to eased geopolitical tensions and a strong dollar. Near-term outlook remains bearish unless fresh volatility arises.


• Currencies: The pound and euro are holding steady, but face potential volatility depending on US data and monetary policy developments in Europe and the UK.


• Oil: Modest gains may reverse depending on the outcome of OPEC+ talks and US-Iran negotiations.

 Outlook for the Week Ahead

Investors should monitor the following developments:

• OPEC+ decisions on output levels and their impact on crude supply


• US economic data releases including jobless claims, GDP updates, and inflation figures


• Any breakthroughs or setbacks in the US-China trade dialogue


• The Federal Reserve's next moves amid mixed inflation and employment data

With markets entering a phase of cautious optimism, asset allocations may tilt away from safe-havens like gold and towards riskier instruments. However, global fragility means that sentiment can reverse quickly, so traders and long-term investors alike should remain vigilant.

Conclusion:

The easing of US-China trade tensions has sparked a shift in commodity and currency markets, dragging gold prices lower while lifting oil slightly. The US dollar’s strength continues to dominate foreign exchange dynamics, and oil remains in focus ahead of key OPEC+ decisions. As always, geopolitical factors and central bank policies will play a defining role in the days to come.