Gold prices stabilized Tuesday in Asian markets, following a sharp drop driven by renewed risk appetite after a surprise U.S.-China tariff truce. The agreement—reducing tariffs by a combined 115% over a 90-day window—spurred a rally in equities and the U.S. dollar, undercutting demand for safe-haven assets like gold.
Spot gold held at $3,236.95 per ounce, while June futures rose 0.4% to $3,240.42, after suffering steep losses on Monday. Market participants remained cautious as they awaited fresh cues from upcoming U.S. inflation data, which could further shape monetary policy expectations.
The recalibration in tariffs—U.S. from 145% to 30%, China from 125% to 10%—was announced after bilateral talks in Geneva. The news ignited optimism across global markets, sending Wall Street indices up between 2.5% and 4.5%.
Dollar Strength Weighs on Gold Recovery
The U.S. dollar surged on Monday, buoyed by expectations that easing trade tensions could bolster domestic growth. The Dollar Index (DXY) climbed above 101.50, its highest in a month, limiting gold’s ability to recover from recent declines.
- Gold under pressure due to:
- Strong U.S. dollar momentum
- Reduced demand for safe havens
- Investor rotation into equities
Other precious metals showed mild rebounds but remained below recent highs:
- Platinum futures: Up 0.5% to $982.65/oz
- Silver futures: Up 1.7% to $33.163/oz
Meanwhile, industrial metals gained traction. Copper, often seen as an economic barometer, rose amid improved sentiment:
- LME copper: Up 0.4% to $9,519.35/ton
- U.S. copper futures: Up 0.1% to $4.6335/lb
The rebound in cyclical commodities signaled market confidence in economic resilience, potentially at the expense of non-yielding assets like gold.
U.S. CPI in Focus for Rate Outlook
Investor attention now shifts to Tuesday’s U.S. Consumer Price Index (CPI) release, which could influence Federal Reserve policy expectations. Inflation is projected to remain elevated, as past tariffs contributed to higher costs across multiple sectors.
Analysts at Goldman Sachs now expect only one Fed rate cut in 2025, revising previous projections of three. Should CPI remain sticky, this could support a stronger dollar and apply further pressure on gold.
Until then, gold is likely to trade in a narrow range, with sentiment tethered to inflation dynamics and Fed policy path.
Would you like a follow-up analysis after the CPI data is released?