Gold prices dipped during Tuesday’s Asian session, following a strong rally sparked by escalating global tensions and renewed trade concerns. The precious metal saw some profit-taking after recent gains, with markets digesting rising instability in both Eastern Europe and the Middle East.
The beginning of June saw gold prices climb significantly amid fresh hostilities between Ukraine and Russia, including a deadly drone assault by Ukraine that cast doubt over the effectiveness of recent peace negotiations. Meanwhile, Moscow showed little interest in progressing toward a lasting truce.
In the Middle East, hopes for a breakthrough in U.S.-Iran nuclear discussions dimmed as former President Donald Trump firmly opposed Iran’s uranium enrichment. The risk-off sentiment was amplified by lingering fears over increased U.S. tariffs and further deterioration in U.S.-China relations – factors that have bolstered demand for traditional safe-haven assets like gold.
By early Tuesday, spot gold slipped 0.6% to $3,361.24 per ounce, while August gold futures dropped 0.4% to $3,384.92 per ounce (as of 00:32 ET / 04:32 GMT). This decline followed a more than 2% surge in spot prices the day before.
Gold Softens as Dollar Rebounds and Investors Take Profits
Gold and other metals experienced downward pressure due to a modest recovery in the U.S. dollar and profit-taking activity among traders. Despite the dip, gold continues to hold onto the bulk of its recent gains, buoyed by the ongoing Russia-Ukraine conflict and the uncertain geopolitical outlook in the Middle East. Tensions have also been inflamed by speculation that Israel might act militarily if U.S.-Iran nuclear talks ultimately collapse.
In addition to geopolitical risks, anxiety over the impact of U.S. trade tariffs and the broader economic implications continues to support gold prices. The bond market recently saw significant selling, further adding to investor unease.
Meanwhile, volatility in U.S. fiscal policy has weighed on both the dollar and Treasuries, particularly amid heightened scrutiny of the country’s growing debt levels. Attention also remains on a controversial tax reform proposal backed by Trump, which recently advanced through Congress. A slight rebound in the greenback from a six-week low added to downward pressure on metal prices.
In other metals markets, platinum futures edged down 0.3% to $1,061.20 per ounce, while silver futures dropped 1.1% to $34.323 per ounce.
Copper Prices Slip After Weak Chinese Manufacturing Data
Industrial metals weren’t spared either. Copper prices declined as disappointing manufacturing data from China – the world’s largest consumer of the metal – weighed on sentiment.
London Metal Exchange (LME) benchmark copper futures fell 0.5% to $9,550.20 per metric ton, while U.S. copper futures plunged 2.5% to $4.7345 per pound.
The drop followed the release of Caixin’s PMI report, which showed a sharper-than-expected contraction in China’s manufacturing sector for May. These figures closely mirrored earlier official data, underscoring a weakening economic trend.
The twin PMI results highlight the drag the ongoing trade dispute with the U.S. is having on China’s industrial output, raising concerns about future copper demand from the top global importer.