Gold prices dipped during Asian trading on Tuesday, halting a modest rebound from the previous session as investor appetite for risk increased following interest rate cuts by China and Australia, which supported equity markets.
Despite a warning from China accusing the U.S. of jeopardizing their recent trade truce with fresh restrictions on chip exports, overall market sentiment remained largely upbeat. Investors were also weighing the implications of Moody’s recent downgrade of the U.S. sovereign credit outlook.
Gold had initially drawn strength from the downgrade, but that momentum faded overnight amid gains in the U.S. dollar and a stable Wall Street performance.
By 01:40 ET (05:40 GMT), spot gold slipped 0.6% to $3,211.65 per ounce, while June gold futures dropped 0.6% to $3,213.67 per ounce.
Rate Cuts in China and Australia Fuel Risk-On Mood
The decline in gold coincided with rising risk-on sentiment across Asian markets, sparked by rate cuts from the central banks of China and Australia. These measures were aimed at reviving economic growth amid global uncertainties, especially as the U.S. continues its tariff-heavy trade approach.
Asian equity markets, particularly in China and Australia, rallied in response, drawing investors away from safe-haven assets like gold.
However, the Reserve Bank of Australia still warned of global growth headwinds stemming from ongoing trade uncertainties—factors that could support gold prices in the long term.
Gold Remains Supported by Broader Economic Worries
Despite its recent pullback, gold continued to trade well above the $3,000 per ounce level, having surged to record highs earlier in May on fears over economic instability and trade tensions.
The latest downturn followed news that the U.S. and China had agreed to scale back their mutual tariffs. Yet, the durability of this agreement was questioned after China criticized new U.S. tech export restrictions as undermining the deal.
Meanwhile, Japan is reportedly planning further trade negotiations with the U.S. this week, though Tokyo remains firm on its demand for full tariff removal.
Attention also turned to a major tax cut bill under consideration in the U.S. House of Representatives. Critics argue the measure could significantly widen the federal deficit, increasing economic risk.
Other Metals Decline
Platinum futures edged down 0.1% to $1,005.15 per ounce, while silver slipped 0.4% to $32.355 per ounce. Industrial metals also saw losses, with London copper futures falling 0.6% to $9,469.05 per ton and U.S. copper futures dropping 0.9% to $4.6195 per pound.
