• Gold staged a partial recovery after a three-day selloff, with dip-buyers returning ahead of an expected interest-rate cut by the Federal Reserve.
• Investors are penciling in a 25-basis-point reduction, although Fed Chair Jerome Powell is unlikely to offer much forward guidance, and lower borrowing costs tend to benefit non-interest bearing precious metals.
• Gold is still up about 50% this year, supported by central-bank buying and the so-called debasement trade, in which investors avoid sovereign debt and currencies to protect themselves from runaway budget deficits.

Gold staged a partial recovery after a three-day selloff, with dip-buyers returning ahead of an expected interest-rate cut by the Federal Reserve.

Bullion advanced toward $4,000 an ounce, having lost more than 4% over the previous three sessions. Investors are penciling in a 25-basis-point reduction, although Fed Chair Jerome Powell is unlikely to offer much forward guidance. Lower borrowing costs tend to benefit non-interest bearing precious metals.

Gold has retreated sharply following a torrid rally that drove prices to a record above $4,380 an ounce last week. Technical indicators had shown the ascent had run too far, too fast — a move that coincided with reduced demand for havens amid signs of progress in US-China trade relations.

With Donald Trump and Chinese counterpart Xi Jinping due to meet on Thursday, the US president talked up the prospects for their summit, telling reporters he expects that there will be “a very good outcome for our country and for the world.”

Even after gold’s recent pullback, the metal is still up about 50% this year, supported by central-bank buying and the so-called debasement trade, in which investors avoid sovereign debt and currencies to protect themselves from runaway budget deficits.

The surge had drawn institutional and retail buyers to gold-backed exchange-traded funds — although outflows this week have dented some of that support. Investors withdrew a net $1 billion from State Street’s SPDR Gold Shares on Monday, the most since April, according to data compiled by Bloomberg. The outflow came as total investor holdings of gold ETFs fell the most in six months.

“Gold’s role as a portfolio hedge against fiscal and policy uncertainty remains undiminished, though short-term exuberance has clearly given way to consolidation,” said Christopher Wong, a currency strategist at Oversea-Chinese Banking Corp. “If we manage to consolidate in this range of $3,920-$4,020 an ounce, then it may set the stage for base-building before the next leg higher.”

Gold’s rapid rise — and recent retreat — was a hot topic at the London Bullion Market Association’s precious metals conference in Kyoto, Japan, this week. The overall mood remained buoyant, with a survey of 106 attendees projecting that gold would trade at nearly $5,000 an ounce in a year’s time.

Spot gold rose 1.1% to $3,996.90 an ounce as of 7:22 a.m. in London. The Bloomberg Dollar Spot Index was up 0.1%. Silver increased almost 2%, while platinum and palladium advanced.

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