With the news on Sunday from Treasury Secretary Scott Bessent that U.S. and China negotiators have reached a trade deal, I expect that we’ve seen a short-term peak in gold.
Gold has been up and down over the last month, whiplashed by good news/bad news on tariffs and talks with China.
Gold closed at $3425 an ounce on April 21 and had dropped to $3344 for June delivery on the Comex as of the close on May 9.
Even if the trade deal turns out to be a big nothing-burger, which is what I expect to learn on Monday–2 days of talks and we get a deal? Come on!–traders are likely to sell risk hedges on the belief that we’ve pulled back from the edge of a very damaging trade war.
What you want to do depends largely on your fondness for trading and the time horizon of your risk hedges.
I believe that risk will be back. In my opinion, your options are selling to take profits and then rebuying when it looks like risk sentiment is rising, or just hold on through this blip until risk sentiment re-emerges. That could take until July, in my worst case scenario.
