Gold takes a breather after hitting USD 3,500 on higher stocks, stronger dollar

Gold fell more than 1% on Tuesday after briefly touching a record high of USD 3,500 earlier in the session, as comments by US Treasury Secretary Scott Bessent hinting at a thaw in US-China trade tensions fueled optimism in equities and strengthened the dollar.

Spot gold fell 1.5% to USD 3,372.68 an ounce by 3:46 p.m. EDT (1946 GMT), after rising as much as 2.2% to USD 3,500.05 earlier in the session. Meanwhile, US gold futures settled 0.2% lower at USD 3,419.40.

“Comments (of the US Treasury Secretary) this afternoon that hinted towards a possible thaw in the trade war with China, was really when (gold) started to sell off,” said Bob Haberkorn, senior market strategist at RJO Futures.

Bessent said Tuesday that he believes there will be a de-escalation in US-China trade tensions, though he described the future negotiations with Beijing as a “slog” that has yet to begin.

US stocks jumped more than 2%, and the dollar rebounded, buoyed by Bessent’s comments, after he called the tariff standoff unsustainable.

The dollar index rose 0.7% against its rivals, making bullion more expensive for holders of other currencies.

“Rallies in the stock market and the US dollar index today are negative for the gold market,” said Jim Wyckoff, senior analyst at Kitco Metals.

Meanwhile, spot gold, up 29% so far this year, notched its 28th record high on Tuesday as it surged to the USD 3,500-per-ounce mark for the first time.

JPMorgan expects the rally to continue, projecting that gold will surpass USD 4,000 an ounce next year amid rising recession risks, higher US tariffs, and persistent US-China trade tensions, the bank said in a note on Tuesday.

Traders will also be watching speeches by several Federal Reserve officials later this week, hoping for insights into future monetary policy amid concerns about the central bank’s independence.

Non-yielding gold acts as a hedge against global uncertainty and inflation and tends to thrive in a low-interest-rate environment.

Gold’s relative strength index (RSI) stands at 74, indicating that the metal is overbought.

Spot silver fell 0.7% to USD 32.47 an ounce, platinum was down 0.8% at USD 953.64, and palladium jumped 0.6% to USD 932.75.

(Reporting by Brijesh Patel and Ishaan Arora in Bengaluru; Editing by David Evans and Mohammed Safi Shamsi)