Gold Price Forecast: Gold/USD edges up above $3,150 amid improving risk appetite

Gold prices were trading slightly higher around $3,180 an ounce in early trading Thursday. However, gold’s potential upside may be limited in the near term due to improving risk appetite and progress in trade talks.

The precious metal remained on the defensive as global trade war tensions eased and investors showed less appetite for safe-haven demand. The United States and China reached an agreement to reduce tariffs on each other after two days of negotiations in Geneva, Switzerland. The United States will reduce tariffs on Chinese imports from 145% to 30%, while China will reduce tariffs on U.S. imports from 125% to 10%.

"Overall, improved risk sentiment is making gold less attractive at the moment," said Ole Hansen, head of commodity strategy at Saxo Bank A/S.

Iran is ready to sign a conditional nuclear deal with U.S. President Donald Trump in exchange for the lifting of economic sanctions, a senior adviser to Supreme Leader Ali Shamkhani said late on Wednesday. These positive developments have had a downside impact on gold.

However, trade uncertainty and escalating geopolitical risks could help limit gold’s losses. Traders will be watching U.S. retail sales and producer price index (PPI) data due later on Thursday. In addition, Federal Reserve Chairman Jerome Powell will also speak.