Gold prices plunged nearly 1% as geopolitical concerns eased, with US-Russia talks in Ukraine and inflation data in focus.
2025-08-11 14:40:41
The gold market has been volatile recently, with price fluctuations weighing on the nerves of global investors. Gold prices saw a significant decline on Monday (August 11th), with market attention focused on the US-Russia talks regarding the Ukraine conflict and the upcoming release of US Consumer Price Index (CPI) data. These two major events not only have implications for the direction of geopolitical developments but may also provide important clues to the Federal Reserve's interest rate policy, thereby influencing the future trend of gold prices.
Spot gold prices fluctuated and weakened on Monday, hitting a three-month low of $3,363.99 per ounce at 2:34 PM, a drop of nearly 1%. Although gold prices hit their highest point since July 23rd last Friday, demand for gold as a safe haven has weakened as geopolitical tensions ease. US gold futures saw an even more pronounced decline, falling nearly 2% to $3,422.2 per ounce. Matt Simpson, senior analyst at City Index, cited the easing of geopolitical risks as one of the primary reasons for the decline in gold prices.
Last Friday, US President Trump announced that he would meet with Russian President Vladimir Putin in Alaska on August 15 to discuss ending the Russia-Ukraine conflict. This news eased market concerns about geopolitical risks. The Russia-Ukraine conflict has been a key factor driving up gold prices since its outbreak, as gold, as a safe-haven asset, is often sought after during times of global turmoil. However, the news of the US-Russia meeting has injected optimism into the market, leading some investors to reduce their safe-haven demand for gold and instead wait and see how the talks progress.
In addition to geopolitical factors, the upcoming US Consumer Price Index (CPI) data for July is also a focus of market attention. Analysts expect the core CPI to rise 0.3% month-over-month and 3.0% year-over-year, driven by tariffs. While this figure still falls short of the Federal Reserve's 2% inflation target, it may provide important guidance for the Fed's future monetary policy. Matt Simpson suggests that a strong CPI reading could further push up the US dollar, thereby suppressing gold prices.
Recent US employment data has fallen short of expectations, significantly increasing market expectations for a September Federal Reserve rate cut. Market pricing places a 90% probability of the Fed easing monetary policy in September, with at least one more rate cut expected by the end of 2025. Rate cuts are generally positive for gold because they reduce the opportunity cost of holding non-yielding assets like gold. However, a potential strengthening US dollar in the short term could limit gold's upside. Simpson believes that despite the pressure on gold prices, bargain-hunting investors are likely to provide support.
Meanwhile, progress in Sino-US trade negotiations has added uncertainty to the market. Trump has demanded Washington and Beijing reach an agreement by August 12, and the approaching deadline has investors on high alert. Escalating trade tensions could fuel risk aversion in the market, providing some support for gold prices. However, a breakthrough in the negotiations could further diminish gold's appeal.
According to data from the U.S. Commodity Futures Trading Commission (CFTC), gold speculators on the New York Mercantile Exchange (COMEX) increased their net long position by 18,965 contracts in the week ending August 5, bringing the total to 161,811. This data indicates that despite a short-term decline in gold prices, speculators remain bullish on the yellow metal in the long term. Market confidence in gold may stem from expectations of global economic uncertainty and loose monetary policy.
The gold market is currently under the influence of a complex mix of factors. The easing of geopolitical risks may weaken gold's safe-haven demand, while the upcoming CPI data and the Federal Reserve's interest rate decision could trigger new price fluctuations. Investors should closely monitor the progress of the US-Russia talks and US inflation data in the short term. If CPI data exceeds expectations, the US dollar could strengthen further, potentially putting gold prices under greater downward pressure. Conversely, if the data is weak or geopolitical risks escalate, gold's safe-haven properties could regain favor.
In the long term, growing expectations of a Federal Reserve rate cut and global economic uncertainty provide potential support for gold. Matt Simpson recommends buying dips in gold prices, but cautions against the risks associated with short-term market volatility. Diversification, monitoring macroeconomic data, and flexibly adjusting strategies will be key to navigating the current complex market environment.
(Spot gold daily chart, source: Yihuitong)
At 14:37 Beijing time, spot gold was trading at $3365.68 per ounce.
Gold prices fall as geopolitical tensions ease
Spot gold prices fluctuated and weakened on Monday, hitting a three-month low of $3,363.99 per ounce at 2:34 PM, a drop of nearly 1%. Although gold prices hit their highest point since July 23rd last Friday, demand for gold as a safe haven has weakened as geopolitical tensions ease. US gold futures saw an even more pronounced decline, falling nearly 2% to $3,422.2 per ounce. Matt Simpson, senior analyst at City Index, cited the easing of geopolitical risks as one of the primary reasons for the decline in gold prices.
Last Friday, US President Trump announced that he would meet with Russian President Vladimir Putin in Alaska on August 15 to discuss ending the Russia-Ukraine conflict. This news eased market concerns about geopolitical risks. The Russia-Ukraine conflict has been a key factor driving up gold prices since its outbreak, as gold, as a safe-haven asset, is often sought after during times of global turmoil. However, the news of the US-Russia meeting has injected optimism into the market, leading some investors to reduce their safe-haven demand for gold and instead wait and see how the talks progress.
US inflation data is coming soon
In addition to geopolitical factors, the upcoming US Consumer Price Index (CPI) data for July is also a focus of market attention. Analysts expect the core CPI to rise 0.3% month-over-month and 3.0% year-over-year, driven by tariffs. While this figure still falls short of the Federal Reserve's 2% inflation target, it may provide important guidance for the Fed's future monetary policy. Matt Simpson suggests that a strong CPI reading could further push up the US dollar, thereby suppressing gold prices.
Recent US employment data has fallen short of expectations, significantly increasing market expectations for a September Federal Reserve rate cut. Market pricing places a 90% probability of the Fed easing monetary policy in September, with at least one more rate cut expected by the end of 2025. Rate cuts are generally positive for gold because they reduce the opportunity cost of holding non-yielding assets like gold. However, a potential strengthening US dollar in the short term could limit gold's upside. Simpson believes that despite the pressure on gold prices, bargain-hunting investors are likely to provide support.
US-China trade negotiations and changes in speculative positions
Meanwhile, progress in Sino-US trade negotiations has added uncertainty to the market. Trump has demanded Washington and Beijing reach an agreement by August 12, and the approaching deadline has investors on high alert. Escalating trade tensions could fuel risk aversion in the market, providing some support for gold prices. However, a breakthrough in the negotiations could further diminish gold's appeal.
According to data from the U.S. Commodity Futures Trading Commission (CFTC), gold speculators on the New York Mercantile Exchange (COMEX) increased their net long position by 18,965 contracts in the week ending August 5, bringing the total to 161,811. This data indicates that despite a short-term decline in gold prices, speculators remain bullish on the yellow metal in the long term. Market confidence in gold may stem from expectations of global economic uncertainty and loose monetary policy.
How should investors respond to the current situation?
The gold market is currently under the influence of a complex mix of factors. The easing of geopolitical risks may weaken gold's safe-haven demand, while the upcoming CPI data and the Federal Reserve's interest rate decision could trigger new price fluctuations. Investors should closely monitor the progress of the US-Russia talks and US inflation data in the short term. If CPI data exceeds expectations, the US dollar could strengthen further, potentially putting gold prices under greater downward pressure. Conversely, if the data is weak or geopolitical risks escalate, gold's safe-haven properties could regain favor.
In the long term, growing expectations of a Federal Reserve rate cut and global economic uncertainty provide potential support for gold. Matt Simpson recommends buying dips in gold prices, but cautions against the risks associated with short-term market volatility. Diversification, monitoring macroeconomic data, and flexibly adjusting strategies will be key to navigating the current complex market environment.
(Spot gold daily chart, source: Yihuitong)
At 14:37 Beijing time, spot gold was trading at $3365.68 per ounce.
- Risk Warning and Disclaimer
- The market involves risk, and trading may not be suitable for all investors. This article is for reference only and does not constitute personal investment advice, nor does it take into account certain users’ specific investment objectives, financial situation, or other needs. Any investment decisions made based on this information are at your own risk.
