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Gold prices remained stable in early Asian trading on Tuesday after a sharp decline of over 1% on Monday, driven by a rebound in the U.S. dollar and growing caution ahead of the Federal Reserve’s interest rate decision. Spot gold (XAU/USD) traded at $2,740.19 per ounce, while February gold futures edged 0.2% higher to $2,770.22 an ounce.
The previous day’s selloff was attributed to a global tech stock rout, sparked by the success of Chinese AI startup DeepSeek, which led traders to cover margin calls, according to a note from ING analysts.
Investor Caution as Fed Decision Nears
The Federal Reserve’s policy meeting, scheduled for Wednesday, has kept investors on edge. While the market expects the central bank to hold interest rates steady, its commentary on inflation and future monetary policy will significantly influence sentiment.
Adding to the uncertainty, U.S. President Donald Trump reiterated his push for higher universal tariffs, proposing rates that could exceed 2.5% and possibly reach 20%. This announcement contributed to a 0.5% jump in the U.S. Dollar Index during Asian trading hours, further pressuring gold.
The dollar’s strength, driven by its safe-haven appeal amidst heightened market volatility, often weighs on gold prices by making the metal more expensive for holders of other currencies.
Broader Precious Metals Market Impact
The stronger dollar also dragged other precious metals lower. Platinum futures fell 0.7% to $954.75 an ounce, while silver futures dipped 0.1% to $30.378 an ounce.
Copper Slides on U.S. Tariff and Chinese Demand Concerns
Industrial metals continued to face headwinds, with copper prices retreating further on Tuesday. Uncertainty surrounding U.S. tariff policies and weak factory activity data from China weighed heavily on market sentiment.
Benchmark copper futures on the London Metal Exchange dropped 0.6% to $9,043.50 a ton, while February copper futures ticked up slightly by 0.2% to $4.250 a pound.
The outlook for copper remains clouded as weaker-than-expected Chinese demand and persistent tariff-related tensions create an uncertain environment for industrial metals.
