Gold dropped early Wednesday, on a strengthening dollar and firmer Treasurys.
The rise in other assets made the yellow metal a less attractive investment, particularly to holders of other currencies, since gold is dollar denominated. The precious metal also came under pressure as trade fears eased amid extended U.S. tariff negotiations.
August gold futures dropped 0.8% Tuesday to settle at $3,316.90 an ounce on Comex, and the front-month contract slid 0.8% in the first two days of the week. Bullion slipped 0.2% in June after losing 0.1% in May and increasing 5.4% in April. It’s up 26% this year. The metal rose 27% in 2024, its biggest annual gain since 2010.
U.S. President Donald Trump delayed threatened reciprocal tariffs on trading partners after Treasury Secretary Scott Bessent indicated that he wanted more time for negotiations. The possibility of a longer period to negotiation lessened haven demand for gold, which is a traditional hedge against geopolitical and economic uncertainty.
On the industrial metals side, copper tumbled after Trump said a higher-than-expected 50% tariff on copper imports is coming. Copper is used in electronics, electrical grids and building construction, among other applications.
In economic news, investors are awaiting today’s afternoon release of the minutes of the Federal Reserve’s June policy meeting for signals on the pace of expected interest rate cuts – and whether a rate reduction is likely to come in September, as most investors anticipate, according to the CME FedWatch Tool. The Fed is overwhelmingly expected to leave rates unchanged at its next policy meeting at the end of this month.
The Fed kept interest rates unchanged at 4.25% to 4.50% in June, though policymakers signaled that the central bank is still factoring two interest rate cuts this year. The Fed reduced rates three times in 2024 but has held them steady this year. The central bank began raising interest rates in March 2022 to fight inflation, ultimately imposing increases of by 5.25 percentage points before beginning rate cuts last year.
Front-month silver futures lost 0.4% Tuesday to settle at $36.75 an ounce on Comex, and the most-active September contract is down 0.9% so far this week. Silver increased 9.5% in June after adding 0.6% in May and dropping 5.2% in April. It rose 21% in 2024.
Spot palladium rose 0.9% Tuesday to $1,125.00 an ounce but is down 2.5% so far this week. Palladium surged 14% last month after advancing 2.8% in May and falling 4.9% in April. Palladium dropped 17% last year.
Spot platinum edged up $1.90 Tuesday to $1,376.70 an ounce, but fell 0.5% in the first two days of the week. It climbed 27% last month after gaining 8.6% in May and retreating 3.1% in April. Platinum lost 8.4% in 2024.
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