Quick overview

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The bullion metal dipped slightly after reaching a three-week high on Monday, amid focus on trade negotiations and US economic data.

The gold market remains generally well bid, although some profit-taking followed the large price increase. South Korea and the European Union announced they are negotiating trade agreements with President Donald Trump.

Trump intensified his trade war on Saturday, threatening to impose a 30 percent tariff on most imports from the EU and Mexico starting next month. He also issued similar warnings to other countries, such as South Korea and Japan.

(XAU/USD) rose during Tuesday’s early Asian session, nearing $3,350. Following US President Donald Trump’s threat of 100% tariffs on Russia, demand for safe-haven assets pushed the price of the precious metal higher. When the US Consumer Price Index (CPI) inflation data is released later Tuesday, all eyes will be on it.

Trump said late Monday that if President Vladimir Putin does not agree to stop his invasion of Ukraine within 50 days, he will impose 100 percent tariffs on Russia. Without providing specifics, the US President added that the charges would take the form of secondary tariffs.. Geopolitical risks could raise gold prices, a traditional safe-haven investment.

However, the US Federal Reserve’s (Fed) cautious stance could weaken the yellow metal. Gold traders are awaiting US CPI data later Tuesday, which may offer clues about the future direction of US interest rates. Fed Chair Jerome Powell stated that he expects inflation to rise this summer due to tariffs, which is seen as keeping the US central bank on hold until later in the year. Economists indicate that US inflation increased slightly last month. Nonetheless, any signs of lower-than-expected inflation could elevate expectations for a Fed rate cut, boosting the price of non-yielding gold.