Gold edges lower on Tuesday

Gold dropped to around $3,320 per ounce on Tuesday, extending its retreat from recent highs as investors reassessed geopolitical risks and the trajectory of US monetary policy in light of evolving trade dynamics. The pullback came as markets digested the fallout from a new wave of US tariff threats, which briefly stoked safe-haven demand before being tempered by signs of potential diplomatic flexibility.

On Monday, President Donald Trump posted a series of letters on Truth Social addressed to the leaders of 14 countries, warning of significantly higher tariff rates unless new trade agreements are reached. In particular, letters to key US allies Japan and South Korea outlined 25% tariffs on imports, fueling fears of trade retaliation and broader supply chain disruption.

However, market anxiety eased somewhat after Trump signed an executive order delaying the implementation of both these country-specific tariffs and broader reciprocal tariffs—from July 9 to August 1—providing negotiators with nearly four additional weeks to find a resolution.

Despite the temporary de-escalation, gold faced renewed headwinds from stronger-than-expected US macroeconomic data. A robust US nonfarm payrolls report released late last week showed continued strength in the labor market, prompting a re-evaluation of recession risks and reducing expectations for near-term monetary easing by the Federal Reserve. As a result, traders have largely priced out the likelihood of a rate cut in July, lifting real yields and pressuring non-yielding assets like gold.

Adding to the cautious tone, investors are now closely watching for the release of the Federal Open Market Committee (FOMC) minutes from the June meeting, scheduled for Wednesday.

Market participants are seeking greater clarity on the Fed’s assessment of inflation persistence, labor market resilience, and the potential timing and magnitude of future policy adjustments. Any hawkish tilt in the minutes—especially in light of recent data—could further dampen sentiment toward gold in the short term.

Nonetheless, underlying support for the metal remains in place amid lingering geopolitical uncertainties, including tensions surrounding the BRICS summit, global tariff risks, and sustained central bank demand. Analysts note that should trade negotiations falter or financial conditions tighten abruptly, gold could quickly regain momentum as a preferred hedge against volatility and policy missteps.