Gold prices eased on Tuesday, as a slightly firmer dollar and optimism over a potential ceasefire between Russia and Ukraine dampened investor demand for safe-haven assets.
Spot gold was down 0.4 percent at $3,215.31 an ounce. US gold futures slipped 0.5 percent to $3,218.40.
The dollar slightly recovered after touching a more than one-week low in the prior session, making greenback-priced gold less appealing to holders of other currencies.
“We are seeing the knee-jerk response to the US credit downgrade wear off and there’s some hope of a truce between Ukraine and Russia,” Capital.com’s financial market analyst Kyle Rodda said.
US President Donald Trump spoke with President Vladimir Putin on Monday and said Russia and Ukraine will immediately start negotiations toward a ceasefire.
“We are seeing buyers emerge on dips below $3,200. However, I think we are due a bigger pullback, especially if there’s further easing in geopolitical risks and we see upward pressure on yields building from US fiscal policy.” Rodda added.
Gold, which is considered a safe asset amid geopolitical and economic uncertainties, has hit multiple record highs this year and is up about 23 percent so far this year.
US Federal Reserve officials 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.
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”.
