Investing.com - Gold prices dipped for a second straight session after U.S. President Donald Trump’s decision not to levy tariffs on Mexican imports hit demand for safe haven assets.
The fact that China also announced fresh stimulus measures to support its economy also boosted risk appetite to the detriment of the precious metal, pushing it to a one-week low.
Gold futures for August delivery on the Comex division of the New York Mercantile Exchange, fell $1.95, or 0.2%, to $1,327.35 a troy ounce by 9:50 AM ET (13:50 GMT).
Trump’s suspension of tariffs on Mexican goods this week broke an eight-day winning streak spurred by increasing speculation that the Fed will need to cut interest rates to support an economy weakened by trade-related disputes.
Ole Hansen, head of commodity strategy at Saxo Bank, pointed out that net-long positions in gold had jumped by a record amount to a 14-month high.
“With the wall of resistance between $1,350 and $1,390 per ounce yet to be broken, these recently established longs will be facing an anxious week,” he said in a note released Tuesday. “Not least following the renewed rally in stocks and small rise in bond yields since Friday,” he added.
Despite a bout of profit-taking, gold did manage to bounce from an intraday low of $1,323.65, its lowest level since June 4, after U.S. inflation data was released on Tuesday.
Producer prices rose slightly in May on a month-on-month basis, reflecting minimal inflation pressure and strengthening arguments that the Fed has room to cut rates. Consumer price data will be released on Wednesday.
Although no changes are expected to interest rates at next week’s monetary policy meeting, fed funds futures price the probability of a quarter-point cut in July at nearly 80%.
In other metals trading, silver futures rose 0.4% to $14.693 a troy ounce by 9:52 AM ET (13:52 GMT).
Palladium futures gained 0.1% at $1,388.35 an ounce, while sister metal platinum traded up 1.1% at $813.70.
In base metals, copper advanced 1.0% to $2.688 a pound. However, the metal viewed as a rough proxy for global economic activity is still down nearly 10% for the quarter.