Gold slides more than 2pc on easing geopolitical tensions, firmer dollar

NEW YORK: Gold fell by more than 2percent on Tuesday as signs of progress in US–Iran talks drove investors away from safe-haven assets, while a stronger dollar added to the pressure to sell.

Spot gold fell 1.9percent to USD4,896.09 per ounce by 09:26 a.m. ET (1426 GMT). US gold futures for April delivery declined 2.6percent to USD4,914.40 per ounce. The US dollar index rose 0.5percent against a basket of currencies, making bullion priced in the currency more expensive for overseas buyers.

“Bull markets need to be fed fresh fundamental fodder often and with the gold and silver markets, there’s been a lack of fresh bullish fundamental news lately to drive prices still higher,” said Jim Wyckoff, senior analyst at Kitco Metals.

Iran and the United States reached an understanding on the main “guiding principles” in a second round of nuclear talks in Geneva on Tuesday but work needs to be done, Iranian Foreign Minister Abbas Araghchi said.

Negotiators from Ukraine and Russia also gathered in Geneva for two days of US-mediated peace talks. Wyckoff said the talks underlined the negatives for gold and silver.

“If the US can avoid attacking Iran, market anxiety would ease and that would be negative for safe-haven gold and silver, and same applies to the Russia-Ukraine talks,” he added.

Investors are awaiting the minutes from the Federal Reserve’s January meeting, due on Wednesday, and the US Personal Consumption Expenditures report for December, due on Friday, for clues on the US central bank’s interest-rate outlook.

Markets so far anticipate the first interest rate cut of the year will be in June. Non-yielding gold tends to do well in low-interest-rate environments.

Many Asian markets were closed on Tuesday for the Lunar New Year holidays, including mainland China, Hong Kong, Taiwan, South Korea and Singapore.

Spot silver fell 2.9percent to USD74.36 per ounce, after dropping as low as USD72.37 earlier in the session. Spot platinum fell 1.2percent to USD2,015.81 per ounce, while palladium lost 2.9percent to USD1,675.17.