Gold Tumbles in Early Asian Trading on Easing U.S.-China Tensions

Market Overview

During early Asian trading on Wednesday, May 7, spot gold sharply pulled back from its overnight highs, plunging over $50 at one point to a session low of $3,377.40 per ounce—a decline of approximately 1.5%.  Temporarily easing market concerns over U.S.-China trade tensions. Despite the dip, gold prices remain up more than 4% so far this week. Meanwhile, U.S. 10-year Treasury yields retreated on the back of a strong bond auction. Crude oil also staged a sharp rebound, rallying nearly 5% intraday.

Hot Topics to Watch

● Oil Prices Rebound on Signs of Stronger Chinese Demand and U.S. Output Cuts

Following a steep sell-off triggered by OPEC+ plans to ramp up production in June, major U.S. shale producers have begun scaling back capital expenditures. The market is increasingly pricing in the possibility that U.S. shale oil has reached its peak output. Companies such as Diamondback Energy (FANG) and Coterra Energy (CTRA) have recently cut drilling activity, signaling potential output declines in the months ahead, which could lend support to oil prices. In addition, strong consumer spending in China during the May Day holiday and post-holiday market participation have also bolstered near-term price action. However, from a broader perspective, oil markets remain structurally bearish.

● U.S. Trade Deficit Widens to $140.5 Billion in March

The U.S. trade deficit in goods and services expanded to $140.5 billion in March, well above the consensus estimate of $137.2 billion and up 14% from Februarys revised $122.7 billion. Imports surged 4.4% to a record $419 billion, driven by an all-time high in consumer goods, along with increases in capital equipment and motor vehicles.

This data likely reflects a pre-tariff inventory rush by U.S. businesses seeking to secure supply chains. However, signs of this front-loading may be easing. According to recent ISM survey data, both manufacturers and service providers reported declining import volumes, suggesting the urgency to accelerate imports ahead of tariff hikes is fading.

Key Events Ahead

• 22:30 GMT+8 – U.S. EIA Crude Oil Inventories for the Week Ending May 2

• 02:00 GMT+8 – U.S. FOMC Interest Rate Decision

• 02:30 GMT+8 – Fed Chair Jerome Powell Holds Monetary Policy Press Conference