Gold prices dipped more than 1% on Wednesday, May 7, 2025, as optimism surrounding U.S.-China trade talks reduced the metal’s appeal as a safe-haven asset.

Spot gold fell 1.4% to $3,380.51 per ounce by 10:11 GMT, following a sharp rise in the previous session. U.S. gold futures also declined by 1% to $3,389.70.

Who Do We Blame?

The decline in gold prices was influenced by reports of a potential meeting between U.S. Treasury Secretary Scott Bessent, chief trade negotiator Jamieson Greer, and China’s top economic official, He Lifeng, in Switzerland this weekend to discuss tariffs.

This development has bolstered investor sentiment, diminishing the demand for safe-haven assets like gold.

Here’s What I’d Do If I Were You

Additionally, market participants are closely watching the Federal Reserve’s policy announcement scheduled for later today, May 7, 2025.

While the central bank is widely expected to keep interest rates steady, investors are looking for signals on future rate cuts. Currently, markets imply only a 30% chance of a Fed rate cut in June, according to the CME FedWatch Tool.

Geopolitical tensions also persist, with India attacking Pakistan and Pakistani Kashmir on May 7, 2025, leading to Pakistan shooting down five Indian fighter jets. This marks the worst fighting in over two decades between the two nuclear-armed nations.

In the broader precious metals market, spot silver slipped 1.3% to $32.82 an ounce, platinum eased 0.2% to $982.56, and palladium edged 0.2% higher to $982.56. These mixed signals are showing us different things.

Investors are advised to monitor developments in U.S.-China trade negotiations and the Federal Reserve’s policy stance, as these factors are likely to influence gold prices in the near term.