Investing.com – Gold prices were under pressure on Wednesday as reports citing three people familiar with the internal deliberations revealed that the Trump administration is considering to raise its planned 10% tariffs on $200 billion in Chinese goods to 25%, pushing the dollar higher.
The report came as focus shifted to U.S.-China trade tensions as the next wave tariffs on imported goods from China is expected to come into effect Wednesday, with China vowing to retaliate in kind.
Gold Futures for August delivery on the Comex division of the New York Mercantile Exchange fell by $3.40, or 0.3%, to $1,220.30 a troy ounce by 1:20AM ET (05:20 GMT).
Earlier this week, Bloomberg reported that the U.S. and China are trying to restart talks on trade to avert a full-blown trade war between the world’s two largest economies.
Representatives of U.S. Treasury Secretary Steven Mnuchin and Chinese Vice Premier Liu He were reportedly looking to restart trade negotiations, Bloomberg report cited two people familiar with the matter.
Mnuchin and Liu agreed more conversation need to talk place, although a more specific timetable and topics to be discussed are yet to be finalized at this stage.
Meanwhile, the U.S. Dollar Index, which measures the greenback against a basket of other currencies, rose 0.1% to 94.42 on Wednesday as the Federal Reserve's two-day meeting got underway.
Most traders expect the Federal Reserve to stand pat on interest rates when it reveals its policy decision later in the day.
Gold is sensitive to moves higher in both bond yields and the U.S. dollar. A stronger dollar makes gold more expensive for holders of foreign currency, while a rise in U.S. rates lifts the opportunity cost of holding gold as it pays no interest.