Gold prices fell for a second straight session on Tuesday, pressured by a steadying of investor risk sentiment after U.S. President Donald Trump said he would delay an increase in tariffs on the European Union's goods.
Spot gold was down 1.4% to $3,296.79 an ounce by 0901 ET (1301 GMT), after gaining nearly 5% in the previous week. U.S. gold futures fell 2.1 percent to $3,296.10.
Analysts say that the fall is the result of changing market sentiment about trade tensions. "There is a great deal of gold price volatility because we keep getting things changing on the tariff front. The market is looking at the impression that there is a deal to be had right now, and all of that is a bit of pressure on gold," said Bart Melek, head of commodity strategies at TD Securities.
The delay in imposing customs taxes was a result of a weekend telephone call between President Trump and EU Commission President Ursula von der Leyen that injected "new impetus" into trade talks. The news lifted risk appetite, which led to a rise in the dollar and stock index futures. A stronger dollar tends to make dollar-denominated assets like gold pricier for holders of other currencies, curtailing demand.
Investors are also closely monitoring the U.S. Federal Reserve's stance on interest rates. Neel Kashkari, President of the Federal Reserve Bank of Minneapolis, stated that it is appropriate to keep interest rates unchanged until the impact of tariffs becomes clearer. The Fed's minutes from its most recent policy meeting are scheduled to be released on Wednesday, along with several key economic indicators, including the first-quarter GDP estimate, weekly unemployment claims, and the core PCE price index.
Even after its recent fall, some analysts remain bullish on gold. We have not changed our longer-term bullish bias on gold. "Once the market bets that the Fed is going to cut rates, gold does well," Melek said. Gold tends to flourish in a low-interest-rate environment, when the return on other forms of investments, like bonds, drops.
Among other precious metals, spot silver was down 1.2% at $32.96 an ounce, platinum lost 0.2% to $1,082.63, and palladium eased 0.3% to $984.50.
