Gold prices fell on Tuesday as softening trade tensions between the U.S. and its trading partners reduced the metal’s safe-haven appeal. Investors are now turning their attention to upcoming U.S. economic data to gauge the Federal Reserve’s potential policy direction.
As of 0619 GMT, spot gold dropped by 0.8% to $3,314.65 per ounce, while U.S. gold futures declined by 0.7%, settling at $3,324.20. “The risk environment has clearly improved recently, with market participants buoyed by optimism that the worst of the trade tensions may be behind us amid encouraging rhetoric around trade deals,” said IG market strategist Yeap Jun Rong.
U.S. Treasury Secretary Scott Bessent commented on Monday that several top trading partners, including India, had made “very good” proposals to avoid U.S. tariffs, and China’s recent decision to exempt some U.S. goods from retaliatory tariffs indicated a willingness to de-escalate tensions. Additionally, President Donald Trump’s administration plans to ease some of the automotive tariffs, alleviating duties on foreign parts used in domestically manufactured cars.
However, despite these positive developments, many economists surveyed in a Reuters poll expressed concern that the global economy could slip into a recession this year, with some citing the adverse effects of Trump’s tariffs on business sentiment. Gold, traditionally viewed as a hedge against political and financial instability, surged to an all-time high of $3,500.05 per ounce last week amid heightened uncertainties.
Looking ahead, investors will closely watch key U.S. economic reports this week, including the job openings data later today, Personal Consumption Expenditures on Wednesday, and the non-farm payrolls report on Friday. “Longer-term structural tailwinds for gold prices are likely to keep the broader upward trend intact, supported by room for ongoing reserve diversification among emerging market central banks,” Rong added.
Meanwhile, other precious metals also saw declines, with spot silver falling by 0.6% to $32.98 per ounce, platinum slipping by 0.2% to $984.65, and palladium losing 0.5% to $944.34.
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