Gold prices fell sharply on Wednesday after U.S. President Donald Trump backed away from threats to fire Federal Reserve Chair Jerome Powell and Treasury official Scott Bessent signaled a potential easing of U.S.-China trade tensions, weakening the metal's safe-haven appeal.
Spot gold dropped 1.2% to $3,340.92 an ounce by 0013 GMT, while U.S. gold futures slipped 2% to $3,349.20.
The retreat follows a historic rally, where gold surged to an all-time high above $3,500 per ounce on Tuesday, marking its 28th record high this year.
Trump softened his stance against the Federal Reserve after days of sharp criticism, and expressed optimism that a trade deal with China could "substantially" reduce tariffs. Separately, Scott Bessent noted that while negotiations with Beijing have not yet started, he expects a de-escalation in tensions, although talks are likely to be a "slog."
The U.S. dollar also recovered slightly from a three-year low, making gold more expensive for holders of other currencies.
Despite Wednesday's decline, market sentiment around gold remains bullish. JP Morgan projects that gold prices could surpass the $4,000-per-ounce milestone next year, driven by persistent global uncertainties and expectations of lower interest rates.
Elsewhere in the precious metals market, spot silver edged up 0.2% to $32.58 an ounce, platinum fell 0.6% to $952.65, and palladium declined 0.4% to $931.91.
Meanwhile, investors are closely watching a series of economic data releases today, including flash manufacturing and services PMIs across Japan, France, Germany, the Eurozone, the UK, and the U.S., along with U.S. new home sales data for March.
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