Gold prices remained stable on Tuesday, supported by stable European stocks and US stock futures, a day after a sharp drop in bullion amid a sell-off led by the technology sector.
At 12:05 GMT, spot gold was steady at $2,742.37 an ounce, while US gold futures rose 0.3% to $2,746.70.
“After yesterday's decline, with gold likely being used to cover losses in other asset classes, stable stock markets in Europe are also keeping gold stable,” said UBS analyst Giovanni Staunovo.
Gold fell more than 1% on Monday, marking its steepest decline since December 18, as investors rushed to sell bullion to offset losses caused by a sharp pullback in tech stocks, driven by DeepSeek's low-cost, low-energy AI model, which called into question the dominance of traditional AI giants.
Investors' attention is now focused on the Federal Reserve's first meeting of the year, which is scheduled to begin later today. Authorities are expected to leave interest rates unchanged at the end of the two-day meeting. However, comments by US President Donald Trump, who wants to see borrowing costs reduced, cast some doubt on the independence of the Fed's decision.
“Market uncertainty should still support demand for gold in the coming months; we still expect higher prices later this year, also driven by further rate cuts by the Fed,” Staunovo added.
Trump's policies, in addition to being perceived as inflationary, could potentially trigger trade wars, increasing demand for bullion as a safe haven.
Gold prices appear to be heading for a record year due to increased economic uncertainty and inflation concerns, a Reuters poll showed. However, analysts lowered their 2025 price forecasts for platinum and palladium, as demand struggles to improve significantly.