Gold slipped as the US dollar rose and prospects of a US-China trade deal increased investors’ appetite for riskier assets such as stocks, while palladium notched a fresh all-time high on tight supply.
Spot gold was down 0.3 per cent at $US1,285.30 per ounce overnight.
US gold futures settled down 0.3 per cent at $US1,285.90 per ounce.
‘People are waiting to see what happens with the tariff talks between US and China,’ said Phil Streible, senior commodities strategist at RJO Futures in Chicago.
‘We could see gold come off on a deal getting done as investors might ship in other assets where they may benefit more.’
Gold, traditionally seen as a safe store of value during times of geopolitical uncertainty, tends to fall when tensions ease.
World stocks, which have been pressured by global growth concerns, rallied on hopes that the United States and China may be moving toward a trade deal.
The two countries will continue trade talks in Beijing for an unscheduled third day, a member of the US delegation said on Tuesday.
‘I think the fact equity prices have stabilised has had a bit of a negative impact on gold prices, especially as the yellow metal has already reached a critical resistance area around $US1,295,’ said Fawad Razaqzada, an analyst with Forex.com.
The dollar rebounded from a nearly three-month low in the previous session amid expectations of a pause in the US rate hike cycle.
A higher dollar makes gold more expensive for holders of other currencies.
Bullion prices on Friday hit their highest since June 2018 at $US1,298.42 largely on the back of stock sell-offs and concerns over the global economy.
While SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, had some outflows on Monday, holdings are still at their highest since August 2018.
‘ETF demand has been one of the primary drivers of the move higher for gold over the past month or so and is still continuing to increase,’ MKS PAMP Group traders said in a note.
‘This has been mainly apparent in US and UK based funds amid uncertainty on growth and Brexit risks,’ they said.
Among other precious metals, palladium was up nearly 1 per cent at $US1,311.60 per ounce, after hitting a record high of $US1,328.62 earlier in the session.
‘The expectation of the supply-demand issue is going to continue and accelerate. … The supply is not going to be able to reach demand,’ said Walter Pehowich, executive vice president of investment services at Dillon Gage Metals.
‘The next level of resistance (for spot palladium) will be around the 1,342 level.’
Silver inched up 0.1 per cent to $US15.66 per ounce, while platinum fell 0.9 per cent to $US814.90, after hitting its highest in more than a month at $US831.10 on Monday.