Gold prices stabilized after a modest decline, as concerns over a U.S. economic slowdown triggered a broad retreat in stocks and most commodities.
Bullion traded above $2,887 an ounce on Tuesday, following a less-than-1% drop the previous day. Investor anxiety grew after President Donald Trump warned that the U.S. economy could weaken before improving, as his tariff-driven trade policies reshape global markets. While gold is often seen as a safe-haven asset, it can face short-term dips during sharp market downturns when investors sell to cover losses elsewhere.
Despite the recent pullback, gold remains up 10% this year, having repeatedly hit record highs. Its rally has been fueled by economic uncertainty surrounding the Trump administration, continued central bank purchases, and speculation that the Federal Reserve may further cut interest rates—an environment that typically supports non-yielding assets like gold.
While gold’s surge has weakened physical demand in key Asian economies, investment in gold-backed exchange-traded funds (ETFs) has remained strong. Holdings in these funds reached their highest level since December 2023 last week, according to Bloomberg data.
“Gold finds itself without a solid physical-market floor,” noted Standard Chartered analyst Suki Cooper, citing subdued demand in India and China. However, she expects prices to set new records this year, provided ETF inflows remain strong enough to offset weaker physical purchases.
Before Monday’s market turmoil, investors had already been scaling back their gold exposure. Hedge funds trimmed bullish positions to a nine-week low, according to the latest Commodity Futures Trading Commission data.
As of 8:58 a.m. in Singapore, spot gold remained little changed at $2,887.77 an ounce. The Bloomberg Dollar Spot Index was flat after Monday’s gains. Meanwhile, silver, palladium, and platinum extended their losses.
