Gold price falls 3% after the US-China agreement

Safe-haven gold fell 3% on Monday as risk sentiment declined following the announcement of a temporary agreement between the United States and China to reduce tariffs in the short term.

Spot gold fell 3% to $3,225.28 an ounce. The gold, considered a hedge against economic and geopolitical turmoil, hit an all-time high of $3,500.05 last month amid heightened tariff uncertainty.

U.S. gold futures fell 3.08% to $3,241.

According to Investing analysts, the precious metal is likely to find support at $3,211.29 and resistance at $3,448.20 per ounce.

Gabriela Siller, director of analysis at Banco Base, said the preliminary agreement between the United States and China reduced global risk aversion, decreasing demand for gold.

“Demand for safe-haven assets was also limited after a ceasefire between India and Pakistan was announced, while US President Donald Trump is trying to secure peace in Ukraine. It's worth noting that Ukrainian President Volodymyr Zelenskyy is asking his Russian counterpart, Vladimir Putin, to hold talks this week,” the expert commented.

Antonio Montiel, Financial Markets Analyst at ATFX, said the world's two largest economies announced the temporary suspension of most reciprocal tariffs, which reduced the perception of systemic risk and, consequently, the demand for safe-haven assets such as gold.

The easing of relations between India and Pakistan also contributed to the metal's downward movement.

However, "despite the short-term correction, structural fundamentals continue to support gold: persistent geopolitical risks, continued expansionary monetary policies by central banks in various regions, and growing concerns about global sovereign debt levels," he emphasized.

"Gold's feverish response to last month's chaotic headlines from the White House made the precious metal vulnerable to a Trumpian backtrack," said Adrian Ash, director of research at BullionVault.

"Now that the mood is more hopeful, gold is likely to find upside potential on retreats from this optimism," he added.

The United States will reduce the additional tariffs it imposed on Chinese imports in April to 30% from 145%, and Chinese tariffs on US imports will fall to 10% from 125%, both sides said. The new measures will be effective for 90 days.

Industrial metals gain

Industrial metal prices rose on Monday as fears about growth and demand eased after China and the United States agreed to reduce reciprocal import tariffs and seek an end to their trade war.

Traders, however, said the market remained cautious.

Benchmark copper on the London Metal Exchange (LME) rose 0.7% to $9,507 a metric ton, while aluminum gained 2.5% to $2,477.

Following talks with Chinese officials, U.S. Treasury Secretary Scott Bessent said the two sides had agreed to a 90-day pause on the measures and that tariffs would be reduced by more than 100 percentage points to a benchmark rate of 10 percent.

"People are hopeful that the tariff situation will be resolved, but they remain nervous," said a copper trader. "This is a less hostile scenario for US-China relations and the global economy, but significant uncertainty remains for businesses and households," Societe Generale analysts said in a note.

"Significant frontloading of trade flows between the United States and China is likely over the next 90 days." (Reuters reported)

Peñoles falls 7% on the BMV due to falling metal prices.

Industrias Peñoles, the world's leading silver producer, led the declines on Monday at the Mexican Stock Exchange (BMV), as a result of the drop in international gold prices following the agreement reached by the United States and Chinese governments.

Peñoles shares fell 7.65% to 387.50 pesos per share, their lowest level since May 2 of this year.

Spot gold fell, and the price of silver also fell, in response to the agreement, causing investors to shift away from safe-haven assets.

In its report to the Mexican Stock Exchange (BMV), Peñoles reported revenues of $1.798 billion in the first quarter of the year, an increase of nearly 29% compared to the same period last year.

Analysts at Intercam, a brokerage firm, highlighted that the company's operating cash flow (EBITDA) also tripled due to the performance of metal prices, with gold increasing 38% and silver 36%. These metals represent 69% of Peñoles' consolidated revenue.

Peñoles shares were the biggest losers on Monday in the Mexican Stock Exchange's main index. (Infosel)