Gold Prices Drop 1% Amid Easing U.S. Trade Tensions; Dollar Sees Steep Monthly Decline as Euro and Franc Surge

Gold prices fell nearly 1% on Tuesday as easing U.S. trade tensions reduced demand for safe-haven assets. The U.S. dollar is set for its largest monthly decline in years, with the euro and Swiss franc gaining significantly. Global equity markets showed mixed signals, with Nikkei and S&P 500 futures rising amid optimism over tariff relief and upcoming U.S. economic data. Investors are focused on key economic indicators, including the PCE inflation report and employment figures, which could influence Federal Reserve policy expectations.

Gold Retreats from Record Highs

Spot gold fell 0.8% to $3,314.99 an ounce as of 0425 GMT on Tuesday, while U.S. gold futures slipped 0.7% to $3,325.10, according to Reuters. The decline follows a surge to an all-time high of $3,500.05 per ounce last week, driven by heightened geopolitical and economic uncertainty. However, recent signs of de-escalation in trade tensions between the U.S. and key partners have dampened bullion’s appeal.

U.S. Treasury Secretary Scott Bessent said on Monday that several countries, including India, had made “very good” proposals to avoid U.S. tariffs. China also announced exemptions for select U.S. imports, signaling a potential thaw in trade relations. These developments have reduced the urgency for investors to seek refuge in gold, traditionally viewed as a hedge against instability.

“The risk environment has clearly improved recently, with market participants buoyed by optimism that the worst of the trade tensions may be behind us,” said IG market strategist Yeap Jun Rong.

Dollar Weakens Sharply in April

While gold prices declined, the U.S. dollar continued its downward trajectory. The greenback is poised for its largest monthly fall in years, reflecting waning investor confidence in U.S. assets amid ongoing trade policy uncertainty and political friction.

The euro rose to $1.1409, marking a 5% gain in April—its strongest monthly performance against the dollar in nearly 15 years. Meanwhile, the Swiss franc appreciated by 7% over the same period, its largest monthly gain in a decade. The franc’s surge underscores its status as a traditional safe-haven currency, bolstered by Switzerland’s political stability and fiscal prudence.

Currency markets were relatively quiet during the Asian session due to a holiday in Japan, but the broader trend remains clear: investors are rotating out of the dollar in favor of more stable alternatives.

Stock Futures Drift Higher

Equity markets showed modest gains on Tuesday, with futures for Japan’s Nikkei and the U.S. S&P 500 inching higher. The uptick was supported by expectations of a softening in U.S. automotive tariffs and optimism surrounding trade negotiations.

The S&P 500 has recovered much of its early April losses, aided by a series of tariff backdowns and improved sentiment. However, investors remain cautious, awaiting key U.S. economic data later this week, including the job openings report, Personal Consumption Expenditures (PCE) inflation data, and the non-farm payrolls report.

In Asia, Hong Kong’s Hang Seng index rose 0.3%, while China’s CSI 300 index slipped 0.2%. Analysts at J.P. Morgan noted a 42% drop in Chinese shipments to the U.S. over the past 10 days, warning that a sustained decline could ripple through global supply chains.

Market Focus Shifts to U.S. Economic Data

With trade tensions showing signs of easing, market participants are now turning their attention to upcoming U.S. economic indicators. The data is expected to provide insight into the Federal Reserve’s policy trajectory and the broader health of the U.S. economy.

Investors are particularly focused on the PCE inflation report and employment figures, which could influence expectations for interest rate adjustments. A stronger-than-expected showing may reinforce the Fed’s current stance, while weaker data could prompt speculation about potential easing.

“The clock is ticking on hard data resilience,” J.P. Morgan analysts wrote in a note, highlighting the potential for further economic fallout from the ongoing trade conflict.

Precious Metals Mixed

Other precious metals also saw modest declines. Spot silver fell 0.5% to $32.98 an ounce, platinum dropped 0.2% to $984.56, and palladium lost 0.4% to $945.47. The broader retreat in metals reflects a shift in investor sentiment as geopolitical risks appear to moderate.

Despite the recent pullback, analysts suggest that longer-term structural factors—such as central bank reserve diversification and persistent inflation concerns—could continue to support gold prices.

Currency Markets Reflect Shifting Sentiment

The dollar’s weakness has been attributed to a combination of factors, including political uncertainty, trade policy volatility, and a reassessment of the U.S. economic outlook. President Trump’s recent criticism of the Federal Reserve and the administration’s unpredictable tariff strategy have further eroded confidence in the greenback.

In contrast, the euro and Swiss franc have benefited from their perceived stability. The franc’s rise, in particular, has placed pressure on Switzerland’s export-driven economy, prompting concerns about deflation and competitiveness. Swiss authorities are reportedly weighing potential policy responses to mitigate the impact of the currency’s strength.

References

• Gold prices drop as tariff concerns ease, US data in focus
• Gold falls on easing trade war concerns; US data awaited
• Stocks drift, dollar slips on US-China standoff
• Currency Strength And Economic Strain: Switzerland Braces For Policy Response
• Gold Retreats from Record High as US Dollar Strengthens Amid Easing Trade Tensions | Investing.com