Gold prices fell for the second straight session on Tuesday, inching closer to the $3,300 level as improving market sentiment and a modest rebound in the US Dollar (USD) dampened demand for safe-haven assets. The slide follows US President Donald Trump’s decision to delay the implementation of a 50% tariff on the European Union (EU) — a move that provided temporary relief to global markets.
Trump’s announcement, made after a call with EU Commission President Ursula von der Leyen, pushed the tariff deadline from June 1 to July 9. Von der Leyen noted that the EU is ready to move quickly on trade talks but requires more time to finalize a deal. The delay eased immediate trade tensions, drawing investors toward riskier assets and away from gold.
Still, investor caution remains high amid ongoing geopolitical risks and economic concerns. Russia launched its largest aerial assault on Ukraine since the full-scale invasion in 2022, while Israeli airstrikes on Gaza continue to fuel instability in the Middle East. In response to the Ukraine escalation, Trump suggested new sanctions against Russia, labeling President Vladimir Putin as “crazy.”
On the fiscal front, Trump’s proposed “Big, Beautiful Bill”, which recently passed the House and now heads to the Senate, is projected to add $4 trillion to the US primary deficit over the next decade. The proposal has sparked renewed concern about the long-term sustainability of US public finances.
Meanwhile, inflationary pressures in the US appear to be easing, reinforcing expectations that the Federal Reserve could move to lower interest rates later this year. Markets are now pricing in at least two 25 basis-point rate cuts by year-end. While this prospect could limit further USD gains and potentially support gold prices, the current uptick in the dollar continues to apply downward pressure on the precious metal.
Traders now await key US economic data, starting with Tuesday’s release of Durable Goods Orders and the Consumer Confidence Index from the Conference Board. However, the spotlight remains on Wednesday’s release of the FOMC meeting minutes, which may offer clearer insights into the Fed’s monetary policy outlook.
The week’s economic agenda also includes Preliminary Q1 GDP data on Thursday and the PCE Price Index on Friday — the Fed’s preferred measure of inflation. These reports are expected to inject volatility into the XAU/USD pair and may present fresh trading opportunities.
Despite the current downtrend, analysts suggest that any further dip in gold prices could be limited, as lingering geopolitical risks and concerns over US fiscal policy continue to support the metal’s longer-term appeal.