Investing.com-- Gold prices fell in Asian trade on Tuesday, cutting short a rebound in the prior session as risk appetite was buoyed by interest rate cuts in both China and Australia, which boosted equities.
A warning from China, that the U.S. was undermining a recent trade truce with its chip export controls, also made for limited headwinds to markets, while investors were digesting a recent downgrade in the U.S. sovereign credit rating by Moody’s.
Gold had found some strength after the Moody’s downgrade. But this strength was cut short by some overnight resilience in the dollar and Wall Street.
Spot gold fell 0.6% to $3,211.65 an ounce, while gold futures for June fell 0.6% to $3,213.67/oz by 01:40 ET (05:40 GMT).
Australia, China rate cuts boost risk in Asia
Losses in gold came amid strength in risk-driven Asian assets, with regional stocks rising after China’s and Australia’s central banks cut lending rates.
Both cuts were aimed at stimulating local economic growth in the face of heightened global economic uncertainty, especially as the U.S. carries on with its trade tariff agenda.
Chinese and Australian stocks rose after the cuts, leading gains across Asian markets and boosting some appetite for risk. This in turn undermined demand for safe havens such as gold.
Still, the Reserve Bank of Australia flagged concerns over slowing global growth due to uncertainty over trade. Such a trend still posits long-term gains for gold.
Gold still upbeat on trade, fiscal concerns
Still, gold remained well above the key $3,000/oz level, after soaring to record highs earlier in May amid heightened uncertainty over the economy and trade.
Gold’s fall from records over the past week was driven chiefly by the U.S. and China agreeing to temporarily slash their steep trade tariffs against each other.
But this truce came into question after China said that U.S. export controls on technology to China were undermining last week’s agreement.
Japan was also seen setting up more high-level trade talks with the U.S. this week, although Tokyo appeared to be unwilling to flinch on its demand that Trump remove all tariffs against Japan.
Markets were also focused on the passage of a sweeping tax cut bill, which the House of Representatives could vote on this week. Critics of the bill have argued that it could further increase the fiscal deficit, presenting greater risks for the world’s biggest economy.
Other precious metals retreated on Tuesday. Platinum futures fell 0.1% to $1,005.15/oz, while silver futures fell 0.4% to $32.355/oz.
Among industrial metals, benchmark copper futures on the London Metal Exchange fell 0.6% to $9,469.05 a ton, while U.S. copper futures fell 0.9% to $4.6195 a pound.