Gold Prices Drop as U.S. Dollar Rebounds, Stocks Move Higher

Investing.com – Gold prices headed lower on Tuesday as the U.S. dollar rebounded and hopes for progress in U.S.-Sino trade negotiations buoyed risk assets.

At 10:21 AM ET (15:21 GMT), for February delivery on the Comex division of the New York Mercantile Exchange fell $4.70, or 0.36%, to $1,285.20 a troy ounce.

Meanwhile, the , which measures the greenback’s strength against a trade-weighted basket of six major currencies, gained 0.35% to 95.56.

The U.S. dollar rebounded after hitting a two-and-half-month low after remarks from Federal Reserve Chairman Jerome Powell were taken as a sign that the central bank could pause its policy tightening this year.

Strength in the American currency decreases the appeal of dollar-denominated gold as it becomes more affordable for holders of foreign currencies.

Investors also sold off the safe-haven precious metal as U.S.-China trade negotiations continued for a second day in Beijing, boosting demand for riskier assets such as equities.

“With the U.S. and China in talks to de-escalate their trade conflict, the central bank showing a willingness to slow its tightening cycle and the economy still performing well, the markets may be looking a little more attractive,” Craig Erlam, senior market analyst at Oanda in London, wrote in a note.

With clocks nearing midnight in Beijing, Steven Winberg, Assistant Secretary for Fossil Energy at the U.S. Department of Energy told reporters at the U.S. delegation’s hotel that talks had gone well and confirmed that they would be .

“Surely, there will be more twists and turns in the saga and increasing U.S. tariffs on Chinese goods after March from 10% to 25% cannot be excluded,” Tamas Varga of PVM Oil Associates said. “For now, however, optimism prevails.”

In other metals trading, dropped 0.48% at $15.680 a troy ounce by 10:22 AM ET (15:22 GMT).

advanced 1.55% to $1,259.60 an ounce, while sister metal dipped 0.22% at $824.80.

In base metals, slipped 0.11% to $2.634 a pound.

— Reuters contributed to this report.

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