Gold Pulls Back After Four-Day Rally as Dollar Strengthens
Gold prices declined on Tuesday after reaching a three-week high, ending a four-session winning streak as investors locked in profits. The pullback came as the U.S. dollar strengthened and concerns over renewed U.S. trade tariffs resurfaced.
At 08:50 ET (13:50 GMT), spot gold fell 1.6% to $5,141.87 per ounce. Earlier in the session, the precious metal had climbed to its highest level since late January. U.S. gold futures also dropped 1.3% to $5,159.06 per ounce.
In the previous session, gold had surged 2.5% amid fresh uncertainty surrounding U.S. trade policy. Meanwhile, silver extended its gains, rising 0.8% to $87.34 per ounce and marking a fifth consecutive day of advances.
Stronger U.S. Dollar Pressures Bullion
The U.S. Dollar Index rose 0.3% on Tuesday after recent losses of roughly 0.5%. A firmer dollar typically weighs on gold prices, as it makes bullion more expensive for investors holding other currencies.
Trade tensions remain a key driver for markets. Last week, the U.S. Supreme Court struck down President Donald Trump’s earlier broad tariff measures. However, the administration quickly introduced new tariffs of up to 15%, renewing fears of escalating global trade disputes.
President Trump warned on Monday that countries attempting to “play games” with U.S. trade agreements could face even higher tariffs, signaling the possibility of further policy action.
Geopolitical risks also remain elevated. The United States and Iran are scheduled to hold a third round of nuclear negotiations in Geneva on Thursday, while military activity in the Middle East continues to add uncertainty to global markets.
UBS Forecasts Gold at $6,200 per Ounce
Despite the recent decline, UBS maintains a bullish outlook on gold. The bank expects prices to rise toward $6,200 per ounce in the coming months, arguing that the fundamental drivers of the rally remain intact.
UBS highlighted ongoing geopolitical uncertainty, including increased U.S. military presence in the Middle East and tighter timelines for a nuclear agreement with Iran. Although geopolitical shocks often have temporary effects on broader financial markets, they typically generate volatility spikes that increase demand for safe-haven assets such as gold.
The macroeconomic environment is also supportive. UBS expects the Federal Reserve to continue easing monetary policy, projecting two 25-basis-point rate cuts by the end of September. Lower interest rates, softer real yields, and a potentially weaker U.S. dollar could further strengthen gold’s appeal, especially if inflation continues to moderate.
