WASHINGTON (dpa-AFX) - Gold prices went on a tailspin on Tuesday as investors resorted to profit-taking from recent record highs even as they assessed the ongoing developments in U.S.-China trade friction, which began after China's recent attempts to restrict its exports to the U.S.
Front Month Comex Gold for October delivery nosedived by $248.70 (or 5.74%) to $4,087.70 per troy ounce.
Front Month Comex Silver for October delivery also had a freefall by $3.6690 (or 7.18%) to $47.450 per troy ounce.
Yesterday, Comex gold for October delivery soared by $146.50 (or 3.50%) to $4,336.40 per troy ounce. This was a new peak for gold.
Today, investors resorted to monetizing these gains and as a result, gold gave ground sharply.
In recent weeks, the relation between the U.S. and China turned sour after China exerted controls over its rare earth mineral exports.
Angered by the development, U.S. President Donald Trump announced a new 100% tariff on China's exports. Trump even expressed displeasure in meeting Chinese President Xi Jinping as originally planned.
As China faced a tariff of more than 150%, the aggravation kept investors concerned about the effects of these cumulative tariffs on the global economy as well as the shortage of rare earth elements.
However, since last weekend, Trump has mellowed down.
First, he conceded that the high tariffs on China are unsustainable and that he was willing to make concessions for China if the country reciprocates by giving the U.S. what it wants.
Even though he warned that China will be in big trouble if they do not do business with the U.S., he appreciated his friendship with Xi and reaffirmed his plans to meet the Chinese leader in South Korea.
Trump called the U.S.-China relation a two-way street and expressed confidence that relations would improve for the better.
Ahead of this visit, economic officials of the U.S. and China are planning to convene in Malaysia this week to discuss a lasting agreement to end the trade war.
Investors assessed these developments between the world's two largest economies cautiously.
Trump is also scheduled to meet Russian President Vladimir Putin in the coming weeks in Budapest, Hungary for face-to-face talks to end the ongoing Russia-Ukraine war.
Meanwhile, EU leaders stood by their plans to use Russia's frozen assets in Europe to aid Ukraine. The 'Coalition of Willing,' a group of 35 countries supporting Ukraine, is scheduled to meet in London on Friday to decide on their next course of action.
In the U.S., the government shutdown entered day number 21 today, as a vote on a bill to fund the government failed again in the Senate last night.
As a result of lack of funding, millions of Americans who depend upon food stamps via the Supplemental Nutrition Assistance Program stand to lose their November benefits if the closure extends for more days.
White House economic advisor Kevin Hassett predicted that the shutdown will likely end this week but as things get harder for Americans, the markets did not react positively to his comments.
Even as the three-week shutdown has delayed key labor and inflation data, the U.S. Federal Reserve is likely prioritizing job stability over inflation fears.
The U.S. lost jobs in June, the first month of losses in more than four years, and added a mere 22,000 jobs in August with more people filing for unemployment benefits. Official jobs data due for October 3 has been delayed due to shutdown.
The Bureau of Labor Statistics has announced that it will publish the September 2025 Consumer Price Index on Friday, October 24.
CME Group's FedWatch Tool is currently indicating a 96.7 percent chance of a quarter point rate cut at the Federal Reserve's monetary policy meeting next week.
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