Gold slides as dollar gains on sentiment about pending US trade decisions

Gold prices dropped sharply on Tuesday, as the US dollar gained ground and President Donald Trump eased his threats of new tariffs on the European Union, cutting down the urgency for safe-haven trades.

According to a Tuesday morning update from Reuters, spot gold sank 1.4% to $3,297.49 an ounce by 11:00 a.m. GMT, while US gold futures dropped harder—down 2.1% to $3,296.50. This is the second straight day of losses for gold after Trump’s unexpected change in tone over the weekend.

On Sunday, Trump walked back his threat to slam the EU with 50% tariffs next month. Instead, he gave negotiators a new deadline of July 9. That was all it took for investors to ease off the precious metal and dive back into riskier assets.

As stocks rebounded, the appeal of gold faded fast. Ole Hansen, head of commodity strategy at Saxo Bank, said, “Gold trades lower for a second day with technical selling along a descending trendline from the April record high, being supported by reduced haven demand amid rising stocks after Trump softened his aggressive trade stance with the EU.”

Dollar gains and Fed expectations push gold and metals lower

While gold was already under pressure from technicals, the real punch came from the dollar index, which flipped its earlier weakness to trade 0.3% higher. That rise in the greenback made the yellow metal more expensive for international buyers, pushing even more out of the market. 

At the same time, investors turned their eyes to Washington, where several Federal Reserve officials are expected to speak this week. Traders are also watching for Friday’s core PCE inflation data, hoping it will offer clues about the central bank’s next rate move. Lower interest rates usually make non-yielding gold more attractive, but the current setup hasn’t moved that needle just yet.

Ole doubled down on the economic watchlist: “Gold traders will be watching incoming US economic data for signs of a tariff-related slowdown and/or a pick up in inflation.” Right now, markets are pricing in 47 basis points of cuts by year-end, with the first move expected in October.

Rhona O’Connell, an analyst at StoneX, isn’t expecting much action near-term. “The shorter term outlook is unchanged: gold is still consolidating. We expect prices to remain supported while the markets contend with continued uncertainty, but we believe that the high is in,” she said.

It wasn’t just gold that got hit. Across the precious metals space, it was a rough session. Spot silver fell 0.9% to $33.06 per ounce. Platinum lost 0.7% to settle at $1,077.77. Palladium also slid 1%, ending the day at $978.01.

Elsewhere in Europe, equities were feeling the boost. The Stoxx 600 index rose 0.99% across the board. Every sector traded in positive territory, but automakers stood out. After losing 3% in the previous session, European car stocks surged 1.7% on Monday, directly reacting to the White House’s tariff pause.

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