Gold prices slipped on Wednesday after hitting a one-week high on news that a top economic advisor to the Trump administration had resigned, stoking fears of a trade war and knocking down the dollar. Market watchers said the departure of economic adviser Gary Cohn, a former Wall Street banker, would embolden protectionist forces in the US administration as President Donald Trump tries to impose hefty tariffs on steel and aluminium.
Spot gold dropped 0.6 percent at $1,325.51 per ounce by 1:34 pm EST (1834 GMT), after touching $1,340.42, its highest since February 26. US gold futures for April delivery settled down $7.60, or 0.6 percent, at $1,327.60 per ounce. "It's a little profit-taking from hitting highs yesterday. The mode today is risk-off for everything, not just commodities, equities, even cryptocurrencies are down," said Michael Matousek, US Global Investors trader.
"It became a risk-off mode because people are unsure of the direction the government is going to take about a lot of things." While a possible trade war could be positive for gold, South Korea agreeing to denuclearization talks could pressure gold, traders said, keeping gold in a tight trading range.
Trump said on Tuesday he saw "possible progress" regarding North Korea after South Korea said Pyongyang is willing to hold talks with the United States on denuclearization and will suspend nuclear tests while discussions are underway. Support for gold could be found below $1,300 per ounce, said Rob Haworth, senior investment strategist for US Bank Wealth Management.
Meanwhile, silver fell 1.4 percent at $16.49 per ounce, after hitting its highest in more than two weeks on Tuesday. Platinum fell 1.7 percent at $952.70 per ounce, earlier dipping to $945.70, a two-month low. Palladium declined 2 percent at $966.40, having hit $961.55, its lowest since February 9.
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