Gold prices fell on Tuesday as investors took profits after a record high, but remained optimistic amid fears of a global trade war driven by new tariffs imposed by US President Donald Trump.
Spot gold fell 0.1% to $2,904.87 an ounce at 1:41 p.m. ET (1841 GMT), after hitting a high of $2,942.70 earlier in the session.
US gold futures fell 0.1% to close at $2,932.60.
“Just seeing some profit-taking by short-term futures traders... the market is overextending a bit and setting itself up for some corrective downward pressure and some consolidation on the charts,” said Jim Wyckoff, senior market analyst at Kitco Metals.
Trump substantially increased tariffs on steel and aluminum imports to a flat 25% “with no exceptions or exemptions,” in a move he hopes will help struggling industries in the US, but which also risks triggering a trade war on multiple fronts.
Traders are watching Wednesday's US inflation data for further clues on the outlook for interest rates in the world's largest economy.
A Reuters poll showed that the Federal Reserve is expected to wait until next quarter before cutting rates again. Tariffs could boost US inflation and postpone rate cuts.
Federal Reserve Chairman Jerome Powell said the central bank is in no hurry to cut interest rates given an economy that is “strong overall” and inflation that remains above its 2% target.
Powell's comments were part of his opening remarks prepared for delivery at a Senate Banking Committee hearing.
“Higher-than-expected inflation readings could extend the Fed's pause on rates, which could cause gold's performance to moderate in the short term,” said Ryan McIntyre, senior portfolio manager at Sprott Asset Management.