Mubasher: Gold prices went down on Wednesday as hopes of an end to the trade war between the US and China fuelled risk appetite, outweighing prospects of a pause in interest rate hikes by the US Federal Reserve.

By 8:43 am GMT, US gold futures declined 0.15% to $1,284 per ounce, while spot gold fell 0.17% to 1,283.23 per ounce.

“In the short term, there is some optimism that there will be a trade truce, which will take away a shadow from market confidence,” Phillip Futures commodities analyst Benjamin Lu Jiaxuan told Thomson Reuters.

However, the precious metal is facing headwinds as risk assets gradually recovered, while investors priced in the Fed’s dovish signals, Jiaxuan said.

The rally in riskier assets gained momentum since last week, after Fed Chairman Jerome Powell said he is aware of risks to the economy, while the central bank would be patient and flexible in its policy decisions this year.

“With Fed clearly indicating that they would be receptive to the developments in the financial markets and there is a clear emerging consensus that there may not be any rate hikes, it could be a tailwind for gold,” Yes Securities vice president Hitesh Jain told Reuters.