Gold prices extended their losses in Asian trading on Tuesday, pressured by a shift in risk sentiment after President Donald Trump postponed plans for steep trade tariffs on Europe.
By 05:30 GMT, spot gold dipped 0.5% to $3,326.53 per ounce, while August gold futures slipped 1.2% to $3,353.09 per ounce. This decline followed Trump’s announcement that 50% tariffs on EU goods would be delayed until early July, aligning with his broader strategy of reciprocal trade measures.
This development lifted risk appetite and buoyed U.S. stock index futures. However, trading volumes remained muted due to the U.S. Memorial Day holiday on Monday.
Despite the pullback, gold’s losses were cushioned by:
- Persistent weakness in the U.S. dollar.
- Lingering concerns over the long-term impact of Trump’s tariffs, which could trigger stagflationary conditions, as noted by Minneapolis Fed President Neel Kashkari.
Kashkari warned that tariffs could slow growth while raising prices, though he suggested the Fed was unlikely to cut rates in the near term.
Bond Yields Retreat, Easing Metal Losses
After a sharp run-up in recent sessions, government bond yields retreated during Asian trade. This added to the downward pressure on gold and broader metals.
The decline in yields followed last week’s turbulence caused by a Moody’s downgrade of the U.S. sovereign rating and the advancement of a divisive tax cut bill in Congress. Both factors sparked concerns over rising government debt, prompting a selloff in Treasuries and driving yields higher.
Key updates:
- Platinum futures slipped 1.1% to $1,079.50/oz.
- Silver futures fell 1.2% to $33.265/oz.
- Copper futures dropped 0.6% to $9,562.80/ton on the London Metal Exchange.
- U.S. copper futures fell 1.6% to $4.7730/lb.
The pullback in yields prompted some profit-taking across metals, following strong gains last week.
Outlook: Gold Holds Despite Broader Losses
While the near-term outlook for gold remains pressured by improved market sentiment and stabilizing bonds, the longer-term picture is more nuanced.
- Trump’s tariff policies continue to cast a shadow over global trade, with the potential for stagflation boosting gold’s appeal as a hedge.
- Investors are balancing short-term profit-taking with broader macroeconomic risks, especially as inflationary pressures mount and central banks remain cautious.
With gold’s next moves closely tied to developments in trade policy, bond markets, and inflation expectations, traders are likely to stay vigilant in the weeks ahead.