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    Gold prices drop to $3,971 as US-China trade relations improve

    by VT Markets
    /
    Oct 28, 2025

    China’s Gold Buying Pause

    The People’s Bank of China has stopped buying gold, and September exports to China fell by 17.6% compared to the previous month. There is a 96% chance the Federal Reserve will lower interest rates during their late October meeting, which could push gold prices higher. Even though gold prices have dropped, the US Dollar Index is down by 0.07%, sitting at 98.84. Treasury yields are also falling. A surge in global stock markets followed positive trade discussions between the US and China. JPMorgan predicts that by late 2026, gold could average $5,055 per ounce. Strong demand from investors and central banks is expected to drive this increase. Gold prices are caught in a tug-of-war between geopolitical factors and monetary policy. The price dip below the important $4,000 mark is due to hopes for a US-China trade deal, making gold less attractive as a safe haven. However, this drop comes just as the Federal Reserve is likely to cut interest rates soon.

    Fed’s Impact on Gold Prices

    The Federal Reserve’s decision on October 29 will significantly affect gold prices. With a 96% chance of a rate cut already expected, the market will pay attention to future policy hints. Last year, gold started to rally after the Fed indicated an easing cycle, so a similar positive tone could reverse the current downtrend. The upcoming meeting between the US and Chinese presidents poses a major risk for the market. A clear trade agreement could send gold prices down to the 50-day moving average around $3,767 as investor confidence rises. On the other hand, if the talks struggle, safe-haven buying may return, pushing prices back above $4,100. For traders who think the optimism around a trade deal will outweigh the Fed’s rate cut, buying put options with strike prices below $3,950 could be a smart move. This strategy would benefit from a continued decline toward the October lows around $3,900. The halt in gold buying by the People’s Bank of China also supports this cautious short-term view. Create your live VT Markets account and start trading now.

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