Gold prices fell more than 1% on Tuesday after hitting a record high of $3,500/ounce as US Treasury Secretary Scott Bessent's comments suggested that US-China trade tensions could ease, boost stock optimism and strengthen the USD.
At 3:46 p.m. EDT, spot gold fell 1.5% to $3,372.68 an ounce. Meanwhile, US gold futures fell 0.2% to $3,419.40.
"The US Treasury Secretary's speech suggests a chance to ease tensions in the trade war with China, which is when gold prices start to fall," said Bob Haberkorn, senior market strategist at RJO Futures.
Bessent said on Tuesday he believes US-China trade tensions will ease, although he described the talks with Beijing as a "difficult process" that has yet to begin.
US stocks rose more than 2%, and the US dollar recovered thanks to Bessent's comments, after he said the situation of facing tariffs was unsustainable.
The USD (.DXY) rose 0.7% against other currencies, making gold more expensive for holders of other currencies.
Todays increases in the stock market and USD index are a disadvantage for the gold market, said Jim Wyckoff, senior analyst at Kitco Metals.
Earlier, spot gold prices rose 29% since the start of the year, hitting a record high of 28 on Tuesday when it first surpassed $3,500/ounce.
JPMorgan expects the rally to continue, predicting gold prices will surpass $4,000 an ounce next year amid concerns about recession, higher US tariffs and persistent US-China trade tensions, the bank noted on Tuesday.
Traders will also pay attention to the speeches of some officials of the US Federal Reserve (FED) this week, looking forward to information on monetary policy in the context of concerns about the independence of the central bank.
Non-yielding gold is a hedge against global uncertainty and inflation and often thrives in a low-interest-rate environment.
Gold's relative strength index (RSI) is currently 74, showing that the metal is overbought.
Silver prices fell 0.7% to $22.47 an ounce, platinum fell 0.8% to $953.64, while palladium rose 0.6% to $932.75.
