Gold firms as dollar slips further, geopolitical uncertainty lingers

Gold prices rose more than 1% on Tuesday as the US dollar weakened further and stocks slipped amid uncertainty over US tariff policy and a potential ceasefire between Russia and Ukraine.

Spot gold was up 1.7% at USD 3,284.74 an ounce by 1345 ET (1745 GMT). US gold futures settled 1.6% higher at USD 3,284.6.

The dollar slipped again on Tuesday, weighed down by the Federal Reserve’s caution over the economy, having sold off broadly on Monday after ratings agency Moody’s downgraded the US sovereign rating, one notch down from “Aaa” to “Aa1” on Friday due to concerns about the nation’s growing debt.

A softer dollar makes bullion cheaper for buyers holding other currencies.

“There’s still a level of uncertainty out in the market. Most notably, the Moody’s downgrade, weakening dollar have supported the precious metals complex overall,” said David Meger, director of metals trading at High Ridge Futures.

US stocks eased as investors focused on a critical vote in Washington over US President Donald Trump’s sweeping tax cuts.

Bullion is considered a safe asset during periods of geopolitical and economic uncertainties.

“Gold will have serious resistance at USD 3,350 with some minor resistance at USD 3,300. We are trading in the new range of USD 3,150 to USD 3,350,” said Phillip Streible, chief market strategist at Blue Line Futures.

Ongoing tensions between Russia and Ukraine are more of a factor for platinum and palladium, Meger said, as no potential deal could mean a lesser supply on the market coming from Russia. Russia is the world’s biggest palladium producer and the second biggest platinum producer.

The EU and Britain announced new sanctions against Russia on Tuesday without waiting for the US to join them, a day after President Donald Trump spoke to Vladimir Putin but was unable to extract a promise for a ceasefire in Ukraine.

Platinum reached its highest since October 2024, climbing 5% to USD 1,048.05. Palladium rose 4.2% to USD 1,015.58, its highest since February 4.

Spot silver rose 2.1% to USD 33.01.

(Reporting by Sarah Qureshi in Bengaluru; Editing by Jan Harvey, Shailesh Kuber and Vijay Kishore)

Oil settles up as signs of US-Iran impasse counter economic concerns

NEW YORK – Oil prices settled marginally higher on Monday as signs of a breakdown in US talks with Iran over its nuclear program offset a Moody’s downgrade of the US sovereign credit rating.

Brent crude futures settled 13 cents higher at USD 65.54 a barrel, while US West Texas Intermediate crude closed up 20 cents at USD 62.69 a barrel. Both contracts rose more than 1% last week.

Nuclear talks will lead nowhere if Washington insists that Tehran stop its uranium enrichment activity, Iranian state media quoted Deputy Foreign Minister Majid Takht-Ravanchi as saying on Monday.

That remark dented hopes for an agreement, which would have paved the way for the easing of US sanctions and allowed Iran to raise its oil exports by 300,000 to 400,000 barrels per day, StoneX analyst Alex Hodes said.

“That potential increase looks very unlikely now.”

The US sovereign credit downgrade by Moody’s raised questions about the economic health of the world’s largest oil consuming nation. Pressure also came from news of slowing industrial output growth and retail sales in China, the top oil importer.

“The weaker-than-expected Chinese data is not helping crude oil, although I would describe the setback as modest,” said UBS analyst Giovanni Staunovo.

Additional pressure came from US Treasury Secretary Scott Bessent’s comments that President Donald Trump will impose tariffs at the rate he threatened last month on trading partners that do not negotiate in “good faith.”

Oil prices are likely to remain volatile for the foreseeable future as investors look for updates on the tariffs, US-Iran negotiations, and talks to end the war in Ukraine, said John Kilduff, partner at Again Capital in New York.

Russian President Vladimir Putin, after a call with Trump on Monday, said Moscow was ready to work with Ukraine on a memorandum about a future peace accord and that efforts to end the war were on the right track.

An end to the Ukraine war would pave the way for the lifting of some Western sanctions against Moscow’s oil sales, potentially boosting global supply and adding more pressure to oil prices, said Andrew Lipow, president of Lipow Oil Associates.

(Reporting by Shariq Khan and Alex Lawler; Additional reporting by Seher Dareen, Florence Tan, and Emily Chow; Editing by Paul Simao; Editing by David Goodman, David Evans, Barbara Lewis, Paul Simao, and Richard Chang)

Gold firms on safe-haven demand after Moody’s US downgrade

Gold prices drifted higher on Monday, steered by a softer dollar and safe-haven demand after Moody’s downgraded the US government’s credit rating.

Spot gold rose 0.9% to USD 3,229.51 an ounce by 1315 ET (1715 GMT).

US gold futures settled 1.5% higher at USD 3,233.5.

Moody’s cut the United States’ rating to “Aa1” from “Aaa” on Friday, citing rising debt and interest “that are significantly higher than similarly rated sovereigns”.

“Overall, over the next few months, I think gold is a good safe bet considering the downgrade on the United States. It’s still to me a buy-and-hold market,” said Bob Haberkorn, senior market strategist at RJO Futures.

The US dollar index hit its lowest level since May 8, while Wall Street’s main indexes slipped. A weaker US currency makes gold less expensive for other currency holders.

Financial markets were also rattled a bit when US Treasury Secretary Scott Bessent said on Sunday that President Donald Trump will impose tariffs at the rate he threatened on April 2 if trading partners did not negotiate in “good faith”.

Gold, which is considered a safe asset amid geopolitical and economic uncertainties, has hit multiple record highs this year and is up 23.1% so far this year.

Goldman Sachs maintained its gold price forecast of USD 3,700/toz by year-end and USD 4,000/toz by mid-2026 in part because of a very modest amount of private sector diversification into gold.

Elsewhere, Russian President Vladimir Putin, after a call with Trump on Monday, said that efforts to end the war in Ukraine were on the right track and that Moscow was ready to work with Ukraine on a memorandum about future peace accord.

Spot silver added 0.3% to USD 32.36 an ounce, while palladium was 1.1% up at USD 998.26.

Demand for platinum jewellery in China is rebounding after a decade-long decline, contributing to a deeper-than-expected global platinum deficit this year, the World Platinum Investment Council said.

Platinum edged 1.4% higher to USD 974.50.

(Reporting by Sarah Qureshi in Bengaluru; Editing by Emelia Sithole-Matarise, Vijay Kishore, and Leroy Leo)

Fiscal concerns drag yields higher after Moody’s downgrade

NEW YORK – Longer-dated Treasury yields rose on Monday on concerns that a US tax bill will increase the debt load by more than previously expected after Moody’s Investors Service on Friday also cut the United States’ sovereign credit rating from the top “Aaa.”

The yields backed away from earlier highs, however, after they reached levels that are seen as attractive to some buyers and with no major economic releases this week expected to drive market direction.

US President Donald Trump’s sweeping tax-cut bill won approval from a key congressional committee on Sunday and Republicans who control the US House of Representatives will try to nudge the bill toward passage this week.

“That looks like it’s going to add more to the deficit than perhaps initially forecasted when looking at a Republican-controlled House and Senate,” said Michael Lorizio, head of US rates trading at Manulife Investment Management. “That’s probably as much, if not a greater driver than the downgrade.”

Nonpartisan analysts say the bill could potentially add USD 3 trillion to USD 5 trillion to the nation’s ballooning USD 36.2 trillion debt pile over the next decade.

Moody’s cited concerns about the nation’s growing debt as a reason for the downgrade and said the fiscal proposals under consideration were unlikely to lead to a sustained, multi-year reduction in deficits.

The action was not much of a surprise to investors, given that Fitch and S&P Global downgraded the US years ago.

“To the extent this announcement was not unexpected, and with investor positioning more neutral than it was in early April, we would expect significantly smaller moves than experienced last month,” JPMorgan analysts led by Jay Barry said in a report on Sunday.

That said, “over the longer term, this downgrade will likely result in higher interest expense,” JPMorgan added.

Treasury yields jumped in early April after Trump announced larger-than-expected tariffs on trading partners, increasing concerns over higher inflation and a sharper economic slowdown.

These concerns have since eased following Trump’s 90-day pause on most of the levies, and after the US and China last week reached a trade agreement.

The 2-year note yield, which typically moves in step with interest rate expectations, fell 0.9 basis points to 3.974%.

The yield on benchmark US 10-year notes rose 3 basis points to 4.469%, having earlier reached 4.564%, the highest since April 11.

The yield curve between two-year and 10-year notes steepened by 2 basis points to 49.5 basis points.

The 30-year bond yield gained 3.7 basis points to 4.934% after touching 5.037%, the highest since November 2023.

Fiscal concerns and trade developments are likely to be the prime market focus this week.

“We don’t have very much else to focus on in the market this week because there’s very little economic data,” said Lorizio.

US Federal Reserve officials speaking on Monday took on cautiously the ramifications of the latest downgrade of the US government’s credit rating and unsettled market conditions as they continued to navigate a very uncertain economic environment.

Demand for longer-dated debt will be tested when the Treasury Department sells USD 16 billion in 20-year bonds on Wednesday and USD 18 billion in 10-year Treasury Inflation-Protected Securities on Thursday.

(Reporting by Karen Brettell; Additional reporting by Johann M Cherian and Amanda Cooper; Editing by Kirsten Donovan and Nick Zieminski)

US dollar rises after data, set for fourth straight weekly gain

NEW YORK – The dollar strengthened on Friday after the latest round of economic data showed a rebound in import prices while consumer sentiment remained subdued as tariff worries jumped, putting it on pace for a fourth straight weekly advance.

The Labor Department said import prices gained 0.1% last month after dropping 0.4% in March as a jump in the cost of capital goods outweighed cheaper energy prices. Economists polled by Reuters had forecast import prices, which exclude tariffs, would decrease 0.4%.

The dollar began to strengthen after a separate reading from the University of Michigan Surveys of Consumers showed its Consumer Sentiment Index dropped to 50.8 this month, below the 53.4 estimate, from a final reading of 52.2 in April. In addition, the 12-month inflation expectations of consumers shot up to 7.3%, the highest level since November 1981, from 6.5%.

The greenback began the week with a surge of more than 1% on Monday after the United States and China announced a 90-day pause on most of the tariffs imposed on each other’s goods since early April, easing fears of a global recession, but had been trending lower throughout the week in part due to tepid economic data.

“There’s all this data, but the headlines are taking over,” said Juan Perez, director of trading at Monex USA in Washington.

“The issue with (trade) developments is that they’re just happening a whole lot faster, and the ongoing, never-ending lack of guidance for the future continues. Meanwhile, we’re looking at data that is not truly reflecting all of the anxiety that we’ve really been living through.”

The dollar index, which measures the greenback against a basket of currencies, rose 0.36% to 101.13, with the euro down 0.37% at USD 1.1146. The greenback is up about 0.7% on the week, which would mark its biggest weekly gain in about 2-1/2 months, while the euro is down 0.9% on the week, and on track for its biggest weekly decline since early February.

The greenback is still down nearly 3% since April 2, when US President Donald Trump announced his spate of tariffs on countries around the globe.

“The very idea that trade is not getting away from turbulence continues to affect the long-term faith in the dollar,” said Perez.

Markets have dialed back expectations for rate cuts from the US Federal Reserve this year as a result of the signs of easing trade tensions, pricing in a 67.1% chance for the first cut of at least 25 basis points (bps) at the central bank’s September meeting, according to LSEG data. The prior view was for a likely cut in July.

Recent comments from Fed officials have indicated the central bank needs more data to determine the impact of the tariff announcements on prices and the economy before adjusting policy.

Against the Japanese yen, the dollar strengthened 0.16% to 145.89. Japan’s economy shrank for the first time in a year and at a faster pace than expected, data for the March quarter showed on Friday.

The dollar is up 0.4% for the week against the yen.

Japanese Finance Minister Katsunobu Kato said he would seek to discuss foreign exchange issues with US Treasury Secretary Scott Bessent on the understanding that excessive currency volatility is undesirable and hopes to meet with Bessent next week.

Sterling weakened 0.2% to USD 1.327 and is down 0.1% on the week.

(Reporting by Chuck Mikolajczak, additional reporting by Stefano Rebaudo; Editing by Andrew Cawthorne and Chizu Nomiyama)

Cooling trade tensions set gold on track for worst week since November

Gold prices dropped more than 2% on Friday and were set for their worst week since November, as increased risk appetite from the US-China trade agreement weighed on the market.

Spot gold fell 1.6% to USD 3,188.25 an ounce as of 1350 ET (17:50 GMT) and was down 4.1% so far this week. Last month, prices had reached a record high of USD 3,500.05 amid escalated tariff tensions.

US gold futures settled 1.2% lower at USD 3,187.2.

“The thawing of the US-China trade war has revived risk appetite across the broader marketplace. This shift is prompting profit-taking among futures traders, particularly in the gold market, and has triggered a week-long wave of liquidation,” said Jim Wycoff, senior analyst at Kitco Metals.

Washington and Beijing earlier this week announced a 90-day pause, while they work out the details to end their tit-for-tat trade war. Later, the US said that it was slashing “de minimis” fees on smaller shipments from China.

As a result, the Wall Street’s three main indexes were on track for weekly gains, fueled by growing investor risk appetite after a long period of uncertainty.

Bullion is considered a hedge against economic and geopolitical turmoil. It also tends to do well in a low-interest-rate environment.

Meanwhile, recent slowing inflation data, combined with a weaker-than-expected economic data, in the United States cemented bets of more Federal Reserve rate cuts this year.

Markets expect the US central bank to implement two rate cuts, beginning in September.

Spot silver lost 1.4% to USD 32.22 an ounce and fell over 1% for the week.

“It seems to me that if gold resumes its bull market run, then silver has a more upside price potential too,” said Wycoff.

Meanwhile, platinum dipped 0.6% to USD 984.10 and palladium eased 1.2% to USD 956.72. Both the sister metals also headed for weekly declines.

(Reporting by Sarah Qureshi in Bengaluru; Editing by Shailesh Kuber, Mohammed Safi Shamsi, and Vijay Kishore)

US yields rise after surprise Moody’s downgrade

NEW YORK – US Treasury yields rose late on Friday after being down for most of the session, after ratings agency Moody’s downgraded the US government rating from AAA to AA1, saying the fiscal performance is likely to deteriorate.

Yields on US 2-year Treasuries accelerated a rise after the downgrade, and were up 2 basis points (bps) late on Friday at 3.993%. They climbed to a session peak of 4.012%.

Yields on benchmark 10-year notes meanwhile, reversed the earlier drop and rose as high as 4.499%.

Moody’s on Friday downgraded the credit rating of the United States by a notch to “Aa1” from “Aaa”, citing rising debt and interest “that are significantly higher than similarly rated sovereigns.”

Tom di Galoma, managing director at Minschler Financial, said the Moody’s move was surprising.

“I think that is highlighting the problems in the budget talks in Congress, the bill failed to pass today in the House committee,” he added.

On Friday, the bill failed to pass a vote in the House Budget Committee despite President Donald Trump’s call for unity among Republicans.

(Reporting by Tatiana Bautzer; Additional reporting by Nupur Anand and Davide Barbuscia; Editing by Barbara Lewis, Gertrude Chavez-Dreyfuss, and Chris Reese)

Retailers set to give tariff view as US stock market roars back

NEW YORK – A batch of US retail earnings reports in the coming week is set to shed more light on the economic fallout from the shifting tariff backdrop and test the stock market’s sharp rebound.

Results from retailers including Target, Home Depot and Lowe’s arrive as investors have become less worried that US President Donald Trump’s tariffs will send the economy into a recession, particularly following the recent US-China trade truce between the world’s two largest economies.

But a warning from Walmart on Thursday that the world’s largest retailer will have to start raising prices due to the high tariffs is putting other retailers in the spotlight, as investors watch how they are reacting to a trade backdrop that remains in flux.

“Retailers are going to be incredibly important, especially after what happened with Walmart’s announcement,” said Matthew Maley, chief market strategist at Miller Tabak.

Maley said it was notable that Walmart’s warning followed news of the US-China truce, in which both sides are reducing their extra tariffs that had exceeded 100% for 90 days.

That Walmart is “still warning about the tariffs that will be put in place, even though they won’t be some of the most severe ones that everybody was worried about, obviously that raises some concerns,” Maley said.

The potential for tariffs to raise prices that could slow consumer spending or drive up inflation has worried investors, particularly since Trump’s April 2 “Liberation Day” announcement of sweeping levies on imports.

The retailers’ quarterly reports also will offer the latest glimpse into the health of consumer spending, which accounts for more than two-thirds of US economic activity.

Data on Thursday showed US retail sales growth slowed sharply in April as the boost from front-loading purchases ahead of tariffs faded, while consumer sentiment and other surveys have been weak.

“Sentiment is pretty sour,” said Jack Ablin, founding partner and chief investment officer at Cresset Capital. “But what we have to do is find out if households are really following through and pulling back on spending.”

Results in the coming week also include apparel maker Ralph Lauren and off-price retailer TJX Cos, with the various reports offering insight into a number of consumer segments, investors said.

One topic of interest is whether shoppers will “trade down” to less expensive items “because people are nervous about rising prices,” said JJ Kinahan, CEO of IG North America and president of online broker Tastytrade.

Stocks have staged a massive recovery since Trump’s April 2 announcement set off extreme volatility and sent stocks plunging. The benchmark S&P 500 index is up over 18% from its April closing low and has erased its losses for the year.

The stock market “just continues to bounce back,” Kinahan said.

(Reporting by Lewis Krauskopf; Editing by Richard Chang)

US inflation progress stokes real yield problem: McGeever

ORLANDO, Florida – Few would find fault with the steady, gradual decline in US inflation, but it has recently come with an unwelcome side effect: rising ‘real’ borrowing costs.

With the Federal Reserve’s official policy rate on hold and the benchmark 10-year Treasury yield edging higher, inflation-adjusted interest rates – so-called real rates – are rising, effectively tightening monetary policy and financial conditions.

The real yield on the 10-year Treasury note is now approaching 2.20%, the highest in a decade, based on the April headline annual CPI inflation rate of 2.3%. And the real fed funds rate has risen from a low of 1.50% in January to eclipse 2.00%, the highest in more than six months.

While real borrowing costs are not at levels that will trigger alarm bells with Fed officials, CEOs or CIOs, the direction of travel is pretty clear, and is one more factor that could weigh on the activity of consumers, businesses, and investors in an environment already shrouded in a thick fog of uncertainty. Additionally, for policymakers, it shines a light on the constant struggle to determine the optimal interest rate at any given time.

In Fed Chair Jerome Powell’s press conference earlier this month after the central bank left its fed funds target range on hold at 4.25-4.50%, he said no fewer than eight times that rates are “in a good place”. Current policy is “somewhat” and “modestly or moderately” restrictive, he added.

The higher real rates grind, however, the tighter policy gets, unless the Fed resumes its easing cycle, which has been on pause following cuts of 100 basis points between last August and December. The tariff-fueled uncertainty and volatility of recent months has helped to extend that pause and, thus, enabled real rates to rise.

R-STAR, MAN

Real borrowing costs can send vastly different signals from their nominal equivalents. For example, Japan’s official policy rate and long-dated bond yields are the highest in years, but the real policy rate is deeply negative and by far the lowest among the G4 central banks.

In the US, the signaling behind today’s rate moves is far from clear. If real yields are rising because investors are demanding a risk premium to hold dollars and Treasuries, then it’s a cause for concern. If the upward shift reflects strong growth expectations, then that’s much more positive.

But, regardless, one thing is evident. The higher US real rates grind, the further away they move from ‘R-Star’, the amorphous real rate of interest that neither stimulates nor crimps economic activity when the economy is at full employment.

Two closely watched R-Star models partly constructed by current New York Fed President John Williams suggest the optimum real interest rate at the end of December was 0.8% or 1.3%, both the lowest in years. These figures will be updated for the January-March quarter at the end of this month. Fed rate-setters’ median projection for the natural real interest rate is around 1.0%, and this view will be updated next month.

These projections assume inflation at the Fed’s 2% target, which it hasn’t been for years. The R-Star concept has come under heavy criticism since the pandemic. Williams defended it in July last year, saying it is a fundamental part of all macroeconomic models and frameworks. “Pretending it doesn’t exist or wishing it away does not change that.”

But he also cautioned that R-Star should not be “overly” relied upon when setting appropriate monetary policy “at a given point in time” given the uncertainty surrounding it.

So as real rates move further away from this theoretical sweet spot, what, if anything, is the real-world impact?

Right now, financial conditions are loosening as markets calm after the market turmoil wrought by the ‘Liberation Day’ tariff tantrum last month. But if you exclude that uniquely volatile episode, conditions have been steadily tightening since September last year, Goldman Sachs’s US financial conditions index shows.

Further upside for real yields from here may be limited if inflation ticks higher in the coming months as Trump’s tariffs kick in. But worries over US debt and deficits are beginning to weigh on the long end of the bond market again.

As investors continue to monitor countless economic variables to determine where the US economy is heading, elevated real yields are one they should watch closely.

(The opinions expressed here are those of the author, a columnist for Reuters)

(By Jamie McGeever)

US yields drop as signs of economic deceleration mount

NEW YORK – US Treasury yields fell sharply on Thursday after data showed deceleration in the world’s largest economy in April, including drops in producer prices, manufacturing output, and a slowdown in retail sales.

The reports suggested the Federal Reserve was on track to cut interest rates at least twice this year.

In afternoon trading, the yield on the benchmark US 10-year Treasury note fell 7.9 basis points (bps) to 4.449%, on track for its largest daily drop since April 24.

The yield on the US 30-year Treasury bond also dipped, down 5.2 bps at 4.915%, after earlier hitting 5% for the first time since April 9.

On the shorter end of the curve, the two-year yield, which typically moves in step with interest rate expectations, was down 9.2 bps at 3.961%, its biggest one-day decline in roughly a month.

Yields retreated after the release of data that showed US producer prices unexpectedly fell in April, with the index for final demand dropping 0.5% after an upwardly revised unchanged reading in March. Economists polled by Reuters had forecast the PPI would rise 0.2%.

“Clearly, companies absorbed a big chunk of tariff increases,” Chris Low, chief economist at FHN Financial, said in emailed comments. “Whether they will continue to do so, or will try to pass them on as price increases, remains to be seen.”

At the same time, US factory output slid more than expected, down 0.4% last month after an upwardly revised 0.4% gain in March. Economists polled by Reuters had forecast production would slip 0.2% after a previously reported 0.3% rise.

US retail sales, on the other hand, were mixed, with the headline figure edging up 0.1% after an upwardly revised 1.7% jump in March. But core retail sales, which exclude automobiles, gasoline, building materials and food services, fell 0.2% in April after an upwardly revised 0.5% gain in March. This measure corresponds most closely with the consumer spending component of gross domestic product.

“The fall in core retail sales was surprising and is helping push yields down,” said Vail Hartman, a rates strategist at BMO Capital Markets in New York. “That’s a discouraging start to the second quarter.”

Walmart WMT.N, the world’s largest retailer, will have to start raising prices later this month due to the high cost of tariffs, executives said on Thursday, as the company declined to provide forecasts for the second quarter. That should further dampen consumer spending and weigh on retail sales even more.

“We are also seeing changes in jobs growth,” added Stan Shipley, managing director at ISI. Thursday’s unemployment claims report showed requests were stable, but also that job opportunities are becoming more scarce for those out of work as economic uncertainty from tariffs discourages businesses from hiring.

The overall data on Thursday reinforced bets on two interest rate cuts by the Fed, with a roughly 75% chance that the easing would begin in September, according to CME Group’s FedWatch tool.

Meanwhile, a closely watched part of the US Treasury yield curve measuring the gap between yields on two- and 10-year Treasury notes, seen as an indicator of economic expectations, was at 48 bps, little changed from Wednesday’s level.

The overall trend remained tilted toward a steeper curve, with yields on the front end falling faster than those on the long end as the Fed carries on with its easing cycle.

(Reporting by Tatiana Bautzer and Gertrude Chavez-Dreyfuss; Editing by Paul Simao and Diane Craft)

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