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Gold price (XAU/USD) tumbles to a two-week low near $4,000 during the early Asian session on Tuesday. The precious metal attracts some sellers after the United States (US) and China agreed on a framework for a trade deal. Traders brace for the Federal Reserve (Fed) interest rate decision later on Wednesday. The attention will shift to the meeting between US President Donald Trump and Chinese leader Xi Jinping on Thursday. 

US Treasury Secretary Scott Bessent said on Sunday that the agreement would remove the threat of 100% tariffs on Chinese imports set to take effect on November 1 and would include “a final deal” on the sale of TikTok in the US. The White House confirmed last week that Trump will meet his Chinese counterpart Xi Jinping, in South Korea on Thursday on the sidelines of an Asian summit. 

Positive developments to defuse trade tensions between the world's two largest economies could undermine safe-haven assets like Gold. "A potential U.S.-China trade deal portends a little less need for safe-haven assets such as gold," said David Meger, director of metals trading at High Ridge Futures.

On the other hand, the expectation of a US interest rate cut might cap the downside for the yellow metal. The markets are now pricing in nearly a 97% possibility of a quarter of a percentage point rate reduction at the Fed's meeting on Wednesday, according to the CME FedWatch tool. Lower interest rates could reduce the opportunity cost of holding Gold, supporting the non-yielding precious metal. 

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