Gold prices were largely steady in Asian trading on Tuesday after falling more than 1% the previous day, as the U.S. dollar rebounded sharply ahead of the Federal Reserve interest rate decision later this week.
XAU/USD was largely muted at $2,740.19 per ounce, while Gold futures expiring in February inched 0.2% higher to $2,770.22 an ounce by 01:31 ET (06:31 GMT).
The yellow metal fell on Monday “as the global rout in technology stocks, sparked by the Chinese AI startup DeepSeek's breakout success, prompted traders to cover margins,” ING analysts said in a recent note.
“Still, gold is up more than 4% so far this year and we believe trade frictions and geopolitical concerns will push it to another record high this year,” they added.
Investors cautious, dollar strengthens as Fed meeting looms
Investors are cautious ahead of the Federal Reserve's policy meeting due later in the week, while uncertainty around U.S. tariffs also weighed on market sentiment.
While the Fed is widely expected to hold rates steady on Wednesday, its commentary on inflation and future rates will dictate the market sentiment.
The US Dollar Index jumped 0.5% in Asian trading on Tuesday after U.S. President Donald Trump reiterated his push for higher universal tariffs, which could exceed 2.5% and potentially reach up to 20%.
The dollar’s strength was further fueled by DeepSeek’s AI advancements, which triggered a sell-off in U.S. tech stocks, and bolstered the greenback’s safe-haven appeal.
A stronger dollar typically drives gold prices lower because it makes the metal costlier for buyers using other currencies.
Other precious metals fell due to a strong dollar. Platinum Futures fell 0.7% to $954.75 an ounce, while Silver Futures inched 0.1% lower to $30.378 an ounce.
Copper falls further on US tariff, Chinese demand concerns
Copper prices retreated further on Tuesday as the dollar rebounded, and uncertainty around Trump’s tariff policies weighed on the red metal.
Chinese weak factory activity data released a day earlier also reflected a clouded demand outlook for industrial metals.
Benchmark Copper Futures on the London Metal Exchange fell 0.6% to $9,043.50 a ton, while February Copper Futures ticked 0.2% higher to $4.250 a pound.
