Gold Retreats From Record Highs After Trump Softens Stance On China

(RTTNews) - Gold prices slumped on Friday, pulling back off the record high set earlier in the session as pressures from firmer US dollar along with U.S. President Donald Trump's reconciliatory tone on the ongoing U.S.-China trade dispute weighed on the yellow metal.

Front Month Comex Gold for October delivery tumbled by $90.30 (or 2.11%) to $4,189.90 per troy ounce. Despite the pullback on the day, gold skyrocketed by $214.00 (or 5.38%) per troy ounce for this week.

Front Month Comex Silver for October delivery plummeted by $3.159 (or 5.96%) to $49.864 per troy ounce. Nonetheless, silver zoomed higher by $2.9260 (or 6.23%) per troy ounce for this week.

Last week, China implemented extensive curbs on its rare earth exports. These critical minerals are crucial for the manufacturing of goods ranging from simple electronic items to advanced fighter jets. China has a near-monopoly in the processing of these minerals.

Technology companies in the U.S. and elsewhere rely on these Chinese rare earths to run their businesses.

Angered by China's move, U.S. President Donald Trump threatened to impose an additional 100% tariff on Chinese goods entering the U.S. In addition, Trump imposed restrictions on "critical software exports" from the U.S. to China.

Taking the conflict to the next level, the world's largest economies levied additional port fees on each other's ships entering their ports.

Trump even indicated he would not meet Chinese President Xi Jinping in South Korea later this month as previously planned.

Due to this flare-up, gold prices catapulted to new records.

The yellow metal surpassed a $30 trillion market capitalization - nearly seven times that of U.S. tech giant Nvidia - an unprecedented milestone for any asset in history. Year-to-date, gold has gained around 61%.

However, today Trump acknowledged that the steep tariffs he levied on China would not be sustainable. Sounding more cordial, Trump also confirmed that he would be meeting Xi as planned and even expressed admiration for him.

The affirmatory tone of Trump during an interview on Fox Business firmed up the dollar and gold gave away the earlier gains.

In the U.S., the government shutdown has entered day number 17, as the Senate voted down a temporary spending bill for the tenth time.

Layoffs of federal employees have commenced as Trump followed through on his intention to downsize the government. A prolonged shutdown prevents the release of official economic indicators essential for the U.S. Federal Reserve's monetary policy deliberations.

This week, U.S. Federal Reserve's Chair Jerome Powell hinted at ending quantitative tightening in the near term in a speech in Philadelphia.

Amid existing economic chaos, CME Group's FedWatch Tool indicates a 99.0% chance of a 25-basis-point interest rate cut at the Federal Reserve's October 28-29 meeting.

In the Middle East, the Gaza Peace Plan proposed by Trump has been so far successful with no adverse events to trigger Israel's offensive.

Trump has set his sights on ending the Russia-Ukraine war after brokering a ceasefire in the Middle East successfully.

Yesterday, he announced that in the next 2-3 weeks, he is set to meet Russian President Vladimir Putin (along with "high-level advisors") in Budapest, Hungary to discuss means to end the war.