Gold prices extended their recent decline in Asian trade on Tuesday, weighed down by improving market sentiment following U.S. President Donald Trump’s unexpected delay in implementing steep tariffs on the European Union. A pullback in global bond yields also tempered demand for the precious metal, traditionally seen as a safe-haven asset.
At 01:30 ET (05:30 GMT), spot gold fell 0.5% to $3,326.53 per ounce, while August gold futures dropped 1.2% to $3,353.09 per ounce.
Risk-On Sentiment Pressures Gold
The yellow metal faced selling pressure as President Trump announced a postponement of planned 50% tariffs on EU goods, now expected to take effect in early July. The delay offered a temporary reprieve to global markets that had braced for immediate disruptions in trade flows and a sharp escalation in geopolitical tensions.
The announcement spurred a risk-on rally in equities, with U.S. stock index futures climbing sharply. However, trading activity remained light due to the U.S. market holiday on Monday.
Despite the current pullback, analysts note that lingering uncertainty over the full impact of Trump’s trade policies is expected to offer underlying support to gold in the medium term. The potential for a stagflationary shock, as suggested by Minneapolis Fed President Neel Kashkari, could drive renewed demand for safe-haven assets in the coming months.
Kashkari warned that while the tariffs may lead to higher inflation and slower growth, the Federal Reserve is unlikely to cut interest rates in the near term, a stance that encouraged buying in U.S. Treasuries after recent sell-offs.
Broader Metals Retreat as Yields Stabilize
Beyond gold, other metal prices also fell, following a sharp rally over the previous week. The retreat came as government bond yields stabilized after a volatile period driven by fears over U.S. fiscal health.
Last week, a Moody’s downgrade of the U.S. sovereign credit rating, alongside the advancement of a contentious tax cut bill in Congress, raised red flags over ballooning government debt. These concerns triggered an aggressive sell-off in Treasuries, pushing yields higher.
However, yields eased on Tuesday as traders returned to bonds, prompting a rotation out of metals. The U.S. dollar also steadied, removing another tailwind that had previously supported metal prices.
Platinum futures dropped 1.1% to $1,079.50/oz
Silver futures slid 1.2% to $33.265/oz
Copper also reversed gains, with LME benchmark futures falling 0.6% to $9,562.80 per metric ton, while U.S. copper futures shed 1.6% to $4.7730 per pound
Market Outlook
While this week’s correction reflects improved short-term sentiment and profit-taking, many analysts maintain a bullish longer-term outlook for gold and precious metals, citing elevated geopolitical risk, potential macroeconomic instability, and shifting central bank policies as ongoing catalysts.
Spot gold remains within striking distance of its record highs, and any further escalation in trade tensions, financial instability, or inflation surprises could quickly reignite demand.
Related topics:
- India Surpasses China in Gold Purchases, Buying 51% More in Three Months
- Qilu Bank Enhances Support for Small Businesses with Innovative Financial Tools
- Bitcoin Poised for a Surge Amid Gold’s Delivery Delays, Expert Claims
