- Dollar rises more than 1% against its rivals
- US and China reach deal to slash tariffs, officials say
- Silver down close to 2%
May 12 (Reuters) - Gold dropped 3% to a more than one-week low on Monday after the United States and China said they had agreed to a deal to cut reciprocal tariffs, sending the dollar higher and denting the safe-haven metal's appeal.
Spot gold was down 3.3% at $3,215.07 an ounce, as of 1022 GMT, its lowest since May 1. U.S. gold futures slipped 3.7% to $3,218.70.
"The de-escalation of tensions between China and the U.S., with tariffs being reduced for 90 days, is reducing the demand for safe haven assets like gold," said UBS analyst Giovanni Staunovo.
"Near-term prices are likely to stay volatile. But higher tariffs are still weighing on economic growth and (will) likely force central banks to cut... interest rates later this year. Also central banks might use this price setback to add exposure."
In a substantial de-escalation, the U.S. and China said they have agreed on a deal to slash reciprocal tariffs as they seek to end a trade war that has disrupted the global economy.
Speaking after talks with Chinese officials in Geneva, U.S. Treasury Secretary Scott Bessent told reporters that the two sides had reached a deal for a 90-day pause on the levies and that reciprocal tariffs would come down by 115%.
The U.S. and China imposed tit-for-tat tariffs last month, triggering a trade war that fueled fears of global recession.
Meanwhile, the dollar index jumped more than 1% against its rivals, making gold more expensive for other currency holders.
Gold is expected to decline as the dollar appreciates. Decreased geopolitical risk could "hurt the haven demand... the yellow metal may decline to $3,200/oz in the near term," said Jigar Trivedi, senior commodity analyst at Reliance Securities.
Traders are also eyeing the U.S. Consumer Price Index data on Tuesday for fresh signals on the Federal Reserve's monetary policy trajectory.
Spot silver slid 1.8% to $32.11 an ounce, platinum fell 1.7% to $978.45 and palladium dipped 1.2% to $963.79.
Reporting by Brijesh Patel in Bengaluru, Editing by Louise Heavens and Pooja Desai
Source: Reuters