Gold prices edged lower Tuesday as investors locked in profits following a powerful four-session surge fueled by trade-policy uncertainty and escalating tensions in the Middle East.
The metal fell as much as 1.6% in early trading before trimming losses, coinciding with the return of Chinese market participants after the Lunar New Year holiday. Prior to the pullback, bullion had rallied more than 7% over four consecutive sessions, buoyed by demand for safe-haven assets. The advance came amid renewed trade friction after President Donald Trump pledged additional import tariffs and as diplomatic strains between the US and Iran intensified.
Analysts noted that the retreat does not necessarily signal a broader shift in sentiment. “Price swings of around 2% are well within the current volatility range,” said Song Jiangzhen of the Guangdong Southern Gold Market Academy. He added that longer-term fundamentals remain supportive, citing persistent geopolitical risks and concerns that US trade measures could further strain global relationships.
Markets have struggled to interpret Washington’s latest policy direction after Trump announced plans to raise a blanket import levy to 15%, following a US Supreme Court decision that struck down his earlier reciprocal tariff framework. The move has complicated negotiations with major trading partners. The European Union, for instance, determined that some of its exports could face duties exceeding levels previously agreed upon under existing trade arrangements.
Christopher Hamilton of Invesco said that while tariff-related headlines continue to underpin gold by sustaining uncertainty, they have yet to trigger a decisive breakout. With real interest rates remaining relatively firm and the US dollar holding steady, he suggested that bullion may enter a consolidation phase rather than extend its recent rally in the immediate term.
Despite the latest dip, gold remains elevated above $5,000 an ounce after recovering from a sharp correction earlier this month. A wave of speculative buying had propelled prices to a record high above $5,595 in late January before a rapid selloff erased a significant portion of those gains. Since then, the metal has clawed back more than half of its losses, though trading conditions have remained volatile.
Several major financial institutions — including BNP Paribas, Deutsche Bank, and Goldman Sachs — continue to project a constructive outlook for gold. Analysts argue that structural drivers remain intact, including questions surrounding Federal Reserve independence, a broader shift away from traditional sovereign debt and currencies, and ongoing geopolitical instability, particularly in the Middle East.
