Gold price under pressure after announcement of tariff suspension - Commerzbank

The price of Gold fell by up to 3.5%, or more than $100, to just over $3,200 per troy ounce following the news of the temporary lifting of most of the reciprocal tariffs between the US and China, Commerzbank's commodity analyst Carsten Fritsch notes.

USD weighs on the Gold price

"This is because the suspension of tariffs for 90 days increased risk appetite on the markets, which is likely to have a negative impact on demand for Gold as a safe haven. The strong demand for safe assets has been the main reason for the sharp rise in the price of Gold since the beginning of the year."

"In addition, the announced tariff pause reduces the risk of recession and thus the probability that the US Federal Reserve will have to cut interest rates significantly. Accordingly, market participants have considerably scaled back their expectations of interest rate cuts. According to Fed Funds Futures, interest rate cuts of just over 50 basis points are now only priced in until the end of the year."

"The resulting rise in bond yields and the US dollar also weighed on the Gold price. Whether the price decline will last longer this time depends largely on whether the lower price level prompts market participants to exit the market or whether they see it as a buying opportunity, as was the case with the previous declines."