From confrontation to dialogue: Trump sends negotiation signal "cooling down" risk aversion, gold prices under pressure, down by 1%

On Tuesday, the price of gold once fell by 1%, mainly affected by two factors: First, the trading volume in Asian major markets was light due to the Lunar New Year holiday, leading to insufficient market liquidity; second, the strength of the US dollar has put pressure on the price of gold. Specifically, spot gold fell by 1% in early trading, but by the time of writing, the price had fallen by 0.68% to $4956.65 per ounce; in contrast, the April delivery of US gold futures contracts fell by 0.83% to $4972.89 per ounce. Due to the Lunar New Year holiday, markets in mainland China, Hong Kong, Singapore, and South Korea remained closed; meanwhile, the US stock market paused trading on Monday for Presidents Day. In this background, the US dollar index rose by 0.2% to a higher level against a basket of currencies, causing the cost of gold priced in dollars to increase for holders of other currencies, indirectly putting pressure on the price of gold. In addition, according to the latest data from the Chicago Mercantile Exchange (CME) FedWatch tool, the market currently expects the Federal Reserve to cut interest rates three times this year, each by 25 basis points. Gold, which does not yield interest, often performs well in a low-interest rate environment. In the geopolitical arena, the temporary easing of risk aversion sentiment has become an important factor suppressing the price of gold. US President Trump recently publicly confirmed on board Air Force One en route to Washington that he will indirectly participate in the second round of US-Iran nuclear agreement negotiations scheduled to be held in Geneva, Switzerland. In his speech, Trump affirmed Iran's tough stance as a negotiator while also implying that after the US military targeted Iran's nuclear facilities last year, Tehran showed an unprecedented willingness to engage in dialogue. Reportedly, this shift from comprehensive confrontation to diplomatic mediation has begun to diminish the "war premium" that supported the price of gold previously. Investors generally expect that if substantial progress can be made in the Geneva talks, the safe-haven appeal of gold will be further weakened. However, the current negotiation situation remains highly uncertain. While Trump expressed a desire to resolve the nuclear issue through diplomatic channels, the US Navy has deployed a second aircraft carrier strike group to the Middle East, combining military deterrence with peace negotiation strategies, keeping the market highly vigilant. Although the price of gold has declined in the short term due to the easing geopolitical situation, considering global debt pressures and the hawkish economic personnel appointments within the Trump administration, gold as a core asset to hedge against order uncertainty has not completely lost its long-term premium logic. It is worth noting that besides the unexpected decline in gold, other precious metals also fell simultaneously. The price of spot silver fell by 1.99% to $75.09 per ounce, hitting a recent low with a drop of over 3% during trading; meanwhile, spot platinum fell by 0.30% to $2014.77 per ounce, and palladium fell by 0.16% to $2017.68 per ounce.