Gold prices dropped to a one-week low on Monday, hitting an intraday low of $3,296. This overall decline comes at the same time as repeated attempts at a global trade negotiation. The United Kingdom and China have already made some substantive progress in these negotiations. Market dynamics changed considerably when U.S. President Donald Trump announced his decision to delay the tariff deadline for countries currently engaged in trade discussions. First announced for July 9th, this missed deadline greatly affected American trade relief talks.
With talks ongoing, Canada is said to be close to wrapping up on new terms of trade. These changes have created impatience among our trading partners. If they do not arrive at a full and complete agreement, they might experience a major tariff hike of as much as 50%. Traders are watching these negotiations to the core, knowing that any halt in communications could severely shift market conditions.
The gold market was deeply troubled, though, by these developing geopolitical trade situations. The yellow metal is typically a safe haven asset during times of economic turmoil. As hopes have grown about a possible positive conclusion to the trade talks, it has come under more intense downward pressure. Analysts note that gold has major support at $3,280. Should prices fall below this threshold, we could see more losses.
Market participants are weighing the implications of extended tariff negotiations against the backdrop of favorable agreements emerging between key global players. The United Kingdom and China have demonstrated their commitment to the spirit of dialogue and compromise with their partial agreements. As a result, many of these investors are today questioning their allocations to gold.