In Brief:
- Gold drifts below $5,000 as light holiday volumes and a firmer dollar keep pressure on prices.
- Silver slides to $74 per ounce, extending its pullback from record highs reached in late January.
- Markets focus on US economic data and Geneva talks between the US and Iran over nuclear programme.
Gold is back below the $5,000 mark on Tuesday morning, trading around $4,911 and extending losses from Monday’s session.
Volatility in the precious metals space has eased after a turbulent couple of weeks, and investors are now focused on key US economic data and upcoming negotiations between the US and Iran over Tehran’s nuclear programme.
Market holidays in China and the US have left trading volumes sluggish, while a modest rise in the dollar has kept metal prices under pressure.
US and Iranian officials are set to meet in Geneva, Switzerland, on Tuesday to discuss their long-running dispute over Tehran’s nuclear plans.
The talks come amid heightened military tensions in the Middle East, where the US has mobilised additional forces to the region, including two aircraft carriers and several warships, while Iran has launched a military drill in the Strait of Hormuz this week.
President Donald Trump has repeatedly threatened military action if Iran rejects a US deal but told reporters on Monday he would be indirectly involved in the talks and believes Iran wants an agreement.
Attention is also on the US economic calendar, with industrial production data and the minutes from the Federal Reserve’s January meeting due on Wednesday and the PCE price index set for Friday, all closely watched for signals on the path of inflation and interest rates.
Uncertainty over US monetary policy has been a key factor weighing on gold in recent weeks, with Trump’s nomination of Kevin Warsh as the next Federal Reserve chair, viewed as less dovish, sparking deep losses in metal markets and traders taking profits after January’s speculative surge pushed gold and other precious metals to record highs.
Recent US data has offered mixed signals, with inflation cooling slightly in January, employment picking up, and the dollar gaining in holiday-thinned trading on Monday, adding further pressure on commodity prices.
Silver continues to correct, with spot silver sliding over 3% to $74 per ounce in early European trading, extending its decline from a bounce off $86 and giving back gains after hitting a record $121 in late January.