Gold Falls to Lowest Level in Three Weeks Amid Trade Optimism and Anticipation of U.S. Federal Reserve Decision

Gold prices fell on Tuesday, October 28, to their lowest levels in three weeks, affected by a decline in demand for the yellow metal as a safe haven, amid growing hopes for progress in trade talks between the United States and China, alongside investors' anticipation of the U.S. Federal Reserve meeting regarding interest rates.

Gold recorded a decline of 0.9% in spot transactions, reaching $3944.29 per ounce, after touching its lowest level since October 6. U.S. gold futures for December delivery also fell by 1.5% to $3959.60 per ounce.

Despite this decline, the price of gold has risen by 51% since the beginning of this year, supported by ongoing geopolitical and trade tensions, in addition to expectations of U.S. interest rate cuts, as gold is typically used as a hedge in times of economic uncertainty.

In this context, Jim Wyckoff, senior analyst at Kitco Metals, stated: "Trade tensions between the United States and China have noticeably eased, with the possibility of reaching a trade agreement later this week following a summit meeting between Presidents Xi and Trump. This signals a decline in precious metal prices, which are considered a safe haven."

Senior economic officials from both countries finalized the framework for a potential agreement earlier this week, which is set to be reviewed by U.S. President Donald Trump and his Chinese counterpart Xi Jinping during their anticipated meeting on Thursday.

This trade optimism has reflected on global markets, where U.S. stock index futures approached record levels after rising in the previous two sessions.

At the same time, investors are awaiting the results of the U.S. Federal Reserve's monetary policy meeting, which lasts for two days and concludes tomorrow, Wednesday, amid widespread expectations of a quarter-point interest rate cut.

Despite these factors, gold forecasts remain unclear, as some analysts believe prices may continue to rise, while others adopt a more cautious approach. The annual meeting of the London Bullion Market Association predicted that gold prices could reach $4980 per ounce over the next twelve months, while "Citi" and "Capital Economics" lowered their gold price forecasts on Monday.

For its part, Bank of America stated in a note: "The market has become overbought, which ultimately led to a correction this week," adding that gold is approaching its negative forecast of $3800 per ounce in the fourth quarter.

As for other precious metals, silver fell in spot transactions by 0.5% to record $46.68 per ounce, after touching its lowest price since September 26. Platinum also declined by 1.1% to $1575.43, while palladium dropped by 3% to $1366.75 per ounce.