A stronger dollar weighed on prices on Tuesday, sending gold to a one-week low as investors awaited clarity on U.S.-Iranian talks and clues about the Federal Reserve’s policy outlook.
Spot gold was down 1% at $4,942.48 an ounce by 1226 GMT, after falling more than 2% early in the session. U.S. gold futures for April delivery fell 1.7% to $4,961.80 an ounce.
The US dollar index rose 0.3% against a basket of currencies, making US dollar-priced gold bullion more expensive for holders of other currencies.
ActivTrades analyst Ricardo Evangelista said: “Traders are currently in wait-and-see mode. Safe-haven demand has paused as the market waits for more clarity on the US-Iran talks, while expectations for the Federal Reserve’s interest rate path may be affected by the release of the latest FOMC minutes.”
The United States and Iran are scheduled to hold indirect nuclear talks in Geneva on Tuesday, but there are few clear signs of compromise as the United States builds up its forces in the Middle East.
Meanwhile, representatives from Ukraine and Russia will meet in Geneva on Tuesday and Wednesday for peace talks brokered by the United States.
Investors will also be scrutinizing the minutes of the Fed’s January meeting, scheduled for Wednesday, for new clues about its rate-cutting path.
The market expects a rate cut in June, according to CME’s FedWatch tool. Gold, which has a low yield, tends to appreciate in value in a low interest rate environment.
“With geopolitical and economic uncertainties likely to support safe-haven demand in the medium-to-long term, and dovish expectations for the US dollar, we see gold prices consolidating above the $5,000 level and increasing their upside towards $6,000 as the year progresses,” Evangelista added.
Markets in mainland China, Hong Kong, Singapore, Taiwan and South Korea are closed for the Lunar New Year holiday.
Spot silver fell 2% to $75.02 an ounce after falling more than 5% earlier in the session.
Spot platinum fell 1.3% to $2,014.95 an ounce and palladium fell 3% to $1,673.30.
(Reporting by Pablo Sinha in Bengaluru; Editing by Ronojoy Mazumdar and Diti Pujara)
