Gold takes a breather after record run on trade war fears

Gold prices slipped on Tuesday as investors booked profits following a record high, yet remained bullish amidst fears of a global trade war spurred by U.S. President Donald Trump’s new tariffs.

Spot gold fell 0.4% to $2,896.53 per ounce as of 08:47 a.m. ET (1347 GMT), after hitting a peak of $2,942.70 earlier in the session.

U.S. gold futures fell 0.4% to $2,923.50.

“Just seeing some profit-taking from the shorter term futures traders… the market’s becoming a bit overextended and just due for some downside corrective pressure and some chart consolidation,” said Jim Wyckoff, a senior market analyst at Kitco Metals.

Trump substantially raised tariffs on steel and aluminium imports to a flat 25% “without exceptions or exemptions” in a move he hopes will aid struggling industries in the United States but which also risks sparking a multi-front trade war.

Traders are keeping an eye on Federal Reserve Chair Jerome Powell’s testimony later in the day and Wednesday’s U.S. inflation data for fresh clues on the interest rate outlook in the world’s largest economy.

A Reuters poll showed the Fed was expected to wait until next quarter before cutting rates again. Tariffs could fuel U.S. inflation and postpone rate cuts.

“Higher than expected inflation readings could extend the rate pause by the Fed, which could cause gold’s performance to moderate in the short term,” said Ryan McIntyre, senior portfolio manager at Sprott Asset Management.

Bullion is considered a hedge against inflation, but higher interest rates dampen the non-yielding asset’s appeal.

Given any new proclamations from President Trump, the potential uncertainty could sustain prices, and profit-taking scenarios, like today’s, might be seen by bullish traders as a buying opportunity during a price dip, Wyckoff said.

Elsewhere, gold leasing rates in India hit a record high, tracking the overseas market, where rates have jumped due to a supply crunch as banks divert the precious metal to the United States in a bid to avoid potential tariffs.

Among other metals, spot silver fell 1.6% to $31.53 per ounce, platinum eased 0.8% to $986.20 and palladium shed 0.7% to $976.