Gold prices edged lower in Asian trading on Tuesday, pressured by a stronger U.S. dollar and investor caution over the Federal Reserve’s next policy move after Chair Jerome Powell’s hawkish comments last week.
By 01:58 ET (06:58 GMT), spot gold slipped 0.4% to $3,986.10 per ounce, while U.S. gold futures fell 0.5% to $3,994.30. The metal continued to struggle to hold above the key $4,000 threshold, as a firm dollar made gold more expensive for buyers using other currencies.
Dollar Gains, Fed Outlook Unclear
The dollar remained strong, climbing to a three-month high against major currencies on Monday, buoyed by declining expectations of another rate cut this year.
Last week, Powell said the Fed was not yet committed to additional easing, noting that a December cut was “not a foregone conclusion.” His remarks prompted traders to scale back bets on near-term rate reductions.
On Monday, several Fed officials offered mixed signals, with some emphasizing vigilance against inflation while others pointed to signs of slowing momentum in the labor market. The contrasting messages added to uncertainty over the Fed’s policy path, keeping the dollar supported.
Gold, which provides no yield, tends to lose favor when interest rates remain elevated or the dollar strengthens. The reduced likelihood of rate cuts and the persistence of higher real yields have both weighed on demand for the metal.
Even so, analysts believe downside risks are capped, as ongoing tensions in U.S.-China trade relations continue to support safe-haven demand. While recent dialogue between Washington and Beijing has eased market nerves, renewed disputes over advanced technology exports have dampened optimism.
Broader Metals Market Weakens
Other metals also came under pressure from the stronger dollar.
Silver futures fell 1.5% to $47.315 per ounce, while platinum futures declined 1.3% to $1,557.85 per ounce.
In base metals, London Metal Exchange copper futures dropped 1.3% to $10,705.20 per ton, and U.S. copper futures slipped by the same percentage to $4.99 per pound.