Gold Slips as Dollar Gains, Trade Talks Keep Markets on Edge
Gold prices slipped on Tuesday, dragged lower by a strengthening US dollar and investor caution surrounding the second day of trade negotiations between the United States and China in London.
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Spot gold dropped 0.6% to $3,307.72/oz by 0502 GMT
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US gold futures fell 0.8% to $3,327.50/oz
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Dollar Index gained 0.3%, increasing gold’s cost for non-dollar holders
The ongoing negotiations between Washington and Beijing—which cover a wide range of trade tensions, including tariff regimes and rare earth export controls—are being closely watched by investors seeking clues about the global economic outlook.
“Gold is trading reservedly until we see any progress is made between the two global superpowers,” said Tim Waterer, Chief Market Analyst at KCM Trade.
Dollar Strength Pressures Bullion
The modest rally in the US dollar has capped gold’s upside for now. A stronger dollar makes gold more expensive in foreign currencies, often reducing demand from key markets such as China and India.
Adding to this pressure, China’s latest export data showed a slowdown, with growth hitting a three-month low in May, partly due to US tariff actions. Simultaneously, factory-gate deflation reached a two-year low, highlighting growing economic weakness that may shape future trade policy decisions.
Eyes on US CPI Data: Inflation Could Move Markets
Gold markets are also bracing for the release of US consumer price index (CPI) data on Wednesday, a key signal for the Federal Reserve’s interest rate trajectory.
According to Waterer:
“If CPI ticks marginally higher, that would be expected. But if it jumps, that could raise alarm bells and trigger a flight to safety—potentially boosting gold prices.”
Historically, gold tends to outperform during:
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Periods of low interest rates
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Rising inflation
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Geopolitical uncertainty
With the Fed’s next move still uncertain, inflation data will likely set the tone for short-term gold price direction.
Other Precious Metals: Mixed Movements
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Silver: -0.5% at $36.52/oz
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Platinum: Flat at $1,219.65/oz
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Palladium: +0.4% at $1,078.94/oz
While gold and silver retreated in tandem with the dollar, palladium showed slight strength, supported by supply concerns and a modest rebound in automotive demand.
Gold in Pakistan: Prices Hold Steady
Despite international fluctuations, gold prices in Pakistan remained stable on Tuesday. Local traders cited limited post-Eid activity and steady demand as reasons for the subdued movement.
Outlook: Waiting for Clarity
Until clearer signals emerge from both the US-China trade discussions and the US CPI print, gold is expected to remain range-bound. Any surprise escalation in trade tensions or a higher-than-expected inflation print could quickly tilt sentiment back in favor of the precious metal.
With global markets on edge, investors continue to view gold as a hedge, albeit a cautious one—for now.