Gold experiences a decline during the early Asian trading hours, likely due to market participants unwinding their long positions in order to liquidate assets for cash. China’s imposition of 34% tariffs on all U.S. imports, coupled with the introduction of restrictions on the export of specific rare-earth minerals, has heightened apprehensions regarding the potential escalation into a comprehensive trade conflict, according to insights from two analysts at Sucden Financial’s Research team. The decline in the precious metal can be attributed to investors liquidating positions to offset losses in other areas, alongside actions driven by profit-taking, according to the members. Spot gold has decreased by 1.5%, now trading at $2,992.35 per ounce.

Gold futures in the United States experienced a decline of 1.3%, settling at $2,997.40. Gold experienced a decline exceeding 3% on Friday, as investors liquidated bullion holdings to offset losses incurred from a broader market downturn, driven by escalating trade tensions that heightened fears of a potential global recession.

The decline in prices has led dealers to hypothesize that investors could be liquidating gold holdings to capitalize on profits, possibly to offset losses or meet margin calls on alternative investments. This situation may initiate a self-reinforcing cycle, where increased selling by investors leads to further price declines, creating a negative feedback loop.

In other metals, spot silver experienced a decline of 2.8%, settling at $28.74 per ounce, which represents its lowest point in almost seven months. The price of spot platinum declined by 1.7%, settling at $900.70, while palladium experienced a decrease of 2.6%, reaching $888.00.