Gold drops 5.3% from record amid easing trade worries

ISTANBUL

Gold fell more than 5.3% Tuesday as US President Donald Trump gave signs of easing trade tensions with China.

The price was around $4,126 per ounce as of 1500GMT, while it still gained around 52.8% annually.

The precious metal hit an all-time high Monday of $4,381.6, fueled by trade tensions between the top two economies, expectations of rate cuts by the Fed and central banks' move to purchase gold for their reserves.

But after Trump's remarks about reaching a "fair deal" with Beijing, following threats to impose 100% tariffs behind China's move to increase rare earth export controls, gold plummeted.

“We're going to be meeting in South Korea in a couple of weeks, and we'll see what we can do," Trump told reporters at the White House about talks with Chinese President Xi Jinping. "I believe after we leave South Korea ... we're going to have a very good relationship with China."

Also adding to easing trade worries, White House top economic adviser Kevin Hassett told CNBC on Monday that he predicts the government shutdown is “likely to end sometime this week.”

But if that does not happen, the Trump administration may impose “stronger measures” to force Democrats to cooperate, he said.

As the government shutdown, now on day 21, disrupts the flow of economic data, inflation number that are set to be released Friday is the focus for investors ahead of a Fed meeting next week.