Gold, Silver Futures Slide as US-China Trade Deal Progress Dampens Safe haven Appeal

Gold and silver fell sharply in the futures market on Monday, tracking weakness in global bullion markets as growing optimism over a potential US-China trade deal and a strong dollar weighed on the safe-haven asset.

On the Multi Commodity Exchange (MCX), gold futures for December delivery dropped by Rs 1,546, or 1.25 per cent to Rs 1,21,905 per 10 grams in a business turnover of 12,428 lots.

The yellow metal lost Rs 3,557, or 2.80 per cent, during the holiday-shortened week.

"Gold prices continue to decline as safe-haven demand weakens amid optimism over a potential US-China trade deal and a stronger US dollar," Darshan Desai, CEO of Aspect Bullion & Refinery, said.

The dollar index, which measures the greenback's strength against a basket of six currencies, was marginally higher by 0.03 per cent to 98.98.

Silver futures also witnessed steep losses on the MCX. The white metal for December delivery plummeted by Rs 1,964, or 1.33 per cent to Rs 1,45,506 per kilogram in a business turnover of 20,367 lots.

It had succumbed by crashing Rs 9,134, or 5.83 per cent, over the past week.

In the international markets, comex gold futures for December delivery fell by USD 61.69, or 1.49 per cent, to USD 4,076.11 per ounce on Monday.

"Gold prices fell to around USD 4,070 per ounce on Monday, extending Friday's decline, as progress in US-China trade talks dampened demand for safe-haven assets," Jigar Trivedi, Senior Research Analyst at Reliance Securities, said.

After two days of discussions in Malaysia, top negotiators from both Washington and Beijing reached a preliminary consensus on key issues including export controls, fentanyl trafficking, agricultural trade, and shipping levies.

The talks paved the way for US President Donald Trump and his Chinese counterpart Xi Jinping to finalise a deal during their meeting in South Korea later this week, Trivedi added.

Comex silver futures for December delivery was quoting 1.44 per cent lower at USD 47.88 per ounce.

Darshan Desai of Aspect Bullion & Refinery cautioned that investors considering gold as a hedge should prepare for short-term volatility and sharp price swings. Positive news on the trade deal or further gains in the US dollar could prompt more profit-taking in gold.

Jigar Trivedi of Reliance Securities added that traders are also focused on major central bank decisions this week, with the Federal Reserve widely expected to cut rates by 25 basis points after softer-than-expected inflation data, while European Central Bank and the Bank of Japan are likely to keep policy rates steady.