Gold prices climbed slightly on Tuesday as a softer U.S. dollar rendered the metal more appealing to international buyers. Investors monitored news about U.S. trade policy and peacemaking efforts by Russia in Ukraine.
Spot gold was up 0.2% at $3,236.94 an ounce at 1102 GMT. U.S. gold futures also rose 0.5% to $3,239.40. The dollar index was 0.2% lower, taking some pressure off gold and other commodities priced in dollars.
Traders were also optimistic about lower tensions between the United States and China and renewed signs of diplomatic efforts in the Russia-Ukraine conflict. "Positive news on the world diplomacy front is helping drive the price of gold today," said Ricardo Evangelista, a senior analyst at ActivTrades.
Additionally, Evangelista stated that although the recent national credit rating downgrade by Moody's "didn't rattle the gold market too much," it should renew interest in owning gold. Moody's downgraded the rating from "Aaa" to "Aa1" on Friday, sending gold up Monday by more than 1%.
There was a slight improvement in risk appetite, which is bearish for gold, but a backdrop of global market instability continues to underpin gold. Analysts said the downside for gold is limited as sentiment among investors remains cautious.
In political news, former U.S. President Donald Trump said Monday that Russia would enter into peace talks with Ukraine "now" by ceasing hostilities. This development has triggered some optimism for the easing of geopolitical tensions.
Federal Reserve officials are waiting to see how the cut in the U.S. credit rating could affect the economy. Several Fed officials were scheduled to speak later in the day, providing insight into U.S. monetary policy ahead.
Markets are pricing in about 54 basis points of interest rate cuts this year, with the initial cut likely in October. These expectations are lending some support to gold's recent rallies.
$3,200 has emerged as an important support zone," said Carlo Alberto De Casa, an analyst at Swissquote. "As long as prices remain above this level, gold may continue to rise," he added.
Among other metals, spot silver rose 0.4 percent to $32.48 an ounce. Platinum rose 1.4 percent to $1,011.53, and palladium rose 0.4 percent to $978.33. Treasury yields remained elevated, and the dollar faltered on concerns about the U.S. fiscal outlook.
