Gold prices steadied in Asian trade on Tuesday after a tariff deescalation between the U.S. and China boosted risk and sparked steep losses in the yellow metal.
But bullion prices found their footing as markets remained on edge over a further deescalation in trade tensions, while anticipation of key U.S. consumer inflation data also dented sentiment.
Still, any major recovery in gold was quashed by strength in the dollar, which rebounded sharply on the U.S.-China trade deal.
Spot gold was flat at $3,236.95 an ounce, while gold futures for June rose 0.4% to $3,240.42/oz by 00:26 ET (04:45 GMT).
Gold nurses losses as US-China deal hits haven demand Gold fell sharply on Monday after Washington and Beijing said they will drastically reduce trade tariffs against each other for the next 90 days, following positive high-level talks in Geneva over the weekend.
The U.S. will lower its tariffs against China to 30% from 145%, while China will lower its tariffs on the U.S. to 10% from 125%.
The announcement drummed up optimism over a greater deescalation in a bitter Sino-U.S. trade war, and spurred broad-based buying across risk-driven assets. Equities were a main beneficiary of this trend, with Wall Street indexes rallying between 2.5% and 4.5% on Monday.
This trend sparked a pullback in safe haven assets such as gold, which had benefited from recent uncertainty over increased U.S.-China trade tensions.
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Gold was also hurt by sharp gains in the dollar, which rose on increased optimism over the U.S. economy from a China tariff deescalation.
Other precious metals rose on Tuesday but were nursing steep losses from the prior session. Platinum futures rose 0.5% to $982.65/oz, while silver futures jumped 1.7% to $33.163/oz.
Industrial metals remained upbeat as the prospect of lower U.S.-China trade tensions presented a brighter outlook for the economy, which bodes well for demand. Benchmark copper futures on the London Metal Exchange rose 0.4% to $9,519.35 a ton, while U.S. copper futures rose 0.1% to $4.6335 a pound.
US CPI inflation in focus for more economic cues Focus was now squarely on upcoming U.S. consumer price index inflation data, which is due later on Tuesday, for more cues on the world’s biggest economy.
CPI inflation is expected to have remained sticky from the prior month, especially as higher U.S. trade tariffs spurred some price increases across the country.
The CPI data is also likely to factor into the dollar’s strength and into expectations for future interest rate action by the Federal Reserve- both of which tie closely into the outlook for gold.
Goldman Sachs on Tuesday said it only expects the Fed to cut interest rates once this year, compared to prior forecasts of three cuts.
