Gold fell nearly 1 percent on Tuesday, sliding from a two-month peak as investors took stock of US President Donald Trump's first policy moves and the dollar stabilised after plumbing seven-week lows this week. Trump formally withdrew from the Trans-Pacific Partnership trade deal on Monday and told US manufacturing executives he would impose a hefty border tax on firms that import products after moving American factories overseas.
"It's all been flagged and it's all playing out according to the well-rehearsed script of Trump and his advisers," Robin Bhar, Societe Generale's head of metals research, said. Trump's protectionist statements and a lack of detail on policy have led some investors to opt for gold, which is often seen as an alternative investment in times of geopolitical and financial turmoil. It rose to its highest level since Nov. 22 during Tuesday's session before giving back gains.
Spot gold was down 0.77 percent at $1,208 an ounce after peaking at $1,219.59. US gold futures slipped 0.4 percent to settle at $1,210.8.
In 2017, precious metals prices are projected to fall 7 percent mainly due to weak investment demand, prospects of a stronger dollar, and rising real interest rates, the World Bank said in its quarterly Commodity Markets Outlook on Tuesday. Gold prices are expected to decline 8 percent, it said. Analysts said the gold market was seeking clarity from Trump's administration on tax and spending policies that could impact growth and provide clues on the direction of US interest rates. Gold is highly sensitive to rising US rates, which increase the opportunity cost of holding the non-yielding asset while boosting the dollar, in which it is priced. Buying in gold had increased in early December but volume traded on the Shanghai Gold Exchange has eased continually since then, Standard Chartered said in a note. Typically, during a strong season, gold buying rises as early as eight weeks ahead of the Lunar New Year, which falls on Saturday, Jan. 28. Silver lost 0.76 percent to $17.07 per ounce. Palladium was up 1.3 percent at $785.97 an ounce after hitting $796.20, its highest since May 2015. Platinum also rose, hitting the highest since Nov. 10 at $1,004.50.