Gold prices fell by more than 2.5% in European trading on Tuesday, retreating from their record highs reached earlier on Monday, as profit-taking and corrective activity accelerated alongside pressure from a stronger US dollar against a basket of global currencies.
Prices also came under additional pressure from improving risk appetite in global financial markets amid easing trade tensions between Beijing and Washington and subsiding political concerns in Japan and France.
Price Overview
• Gold prices fell by 2.6% to $4,242.83, down from the opening level of $4,356.41, after hitting an intraday high of $4,375.40.
• At Monday’s close, gold rose by 2.45%, reaching an all-time high of $4,381.73 per ounce amid strong safe-haven demand.
US Dollar
The US Dollar Index rose by 0.3% on Tuesday, extending gains for the third consecutive session and reaching a one-week high of 98.89 points, reflecting continued strength of the greenback against a basket of major and minor currencies.
As is well known, a stronger dollar makes dollar-denominated gold less attractive to investors holding other currencies.
Improved Risk Appetite
Most global stock markets rose on Tuesday as risk appetite improved amid easing trade tensions between Beijing and Washington and fading political concerns in Japan and France.
US President Donald Trump said on Friday that imposing “comprehensive” tariffs on China would not be sustainable.
In a historic and unprecedented event, Japan turned a new page in its political history today after Sanae Takaichi won the position of Prime Minister, becoming the first woman ever to hold the country’s highest office.
In France, the political climate has stabilized somewhat after Prime Minister Sébastien Lecornu’s government gained a measure of confidence in the divided parliament, particularly following the decision to suspend the 2023 pension reform.
Gold Outlook
• Tim Waterer, Chief Market Analyst at KCM Trade, said that profit-taking and reduced safe-haven inflows have limited gold’s upside impact today. “Any dip in gold prices will be seen as a buying opportunity as long as the Federal Reserve remains on its current path toward rate cuts.”
• Waterer added that gold’s current upward trend still has room to continue, provided this week’s upcoming US Consumer Price Index data does not deliver any unexpectedly strong readings.
SPDR Fund
Gold holdings at SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, rose by 11.45 metric tons on Monday — marking a seventh consecutive daily increase — bringing total holdings to 1,058.66 metric tons, the highest level since June 24, 2022.
