• Raising the risk of conflict in the Middle East, upsetting European allies and casting uncertainty over global oil supplies, Trump said he would reimpose U.S. economic sanctions on Iran that had been lifted under the 2015 agreement.
• The dollar rose against the yen as oil prices climbed to a 3-1/2-year high, pushing yields on the benchmark 10-year Treasury note closer to 3 percent.
Spot gold had fallen 0.2 percent to $1,311.44 per ounce by 0346 GMT.
• U.S. gold futures for June delivery were about 0.2-percent lower at $1,311.70 per ounce.
• “(Gold is) stuck between rising geopolitical risks and the stronger U.S. dollar. The safe-haven buying certainly hasn’t been as strong as we thought it might have been following Trump’s announcement,” said ANZ analyst Daniel Hynes.
• Meanwhile, Trump and Chinese President Xi Jinping discussed ongoing trade issues on Tuesday, as both sides continue to position themselves amid a heated feud over tariffs between the world’s two largest economies.
• Spot gold may revisit its May 1 low of $1,301.51 per ounce as it failed three times to break resistance at $1,317, said Reuters technical analyst Wang Tao.
• In other precious metals, silver slipped 0.1 percent to $16.42 an ounce.
• Platinum rose 0.1 percent at $912.50 per ounce, while palladium gained 0.3 percent at $972.40 an ounce.
• Gold’s price rally has been a product of demand-side economics, and there is still a considerable amount of interest in gold that is not fully tapped, according to Tom Brady, chief economist at Newmont Mining.
“The trend that we’ve seen over the last couple of years has continued, this was very much an investor-driven market since 2016,” Brady told Kitco News on the sidelines of the Mines & Money New York conference.
Gold prices rose from $1,050 an ounce in 2016 to $1,314.20 as of Tuesday’s close, and according to Newmont economist, a large part of that rally is due to investor interest in the precious metal, rather than physical demand.
“It has been an investor-driven story, physical demand, the demand for jewelry, bars, and coins, are relatively muted,” he said.
Gold has been range-bound for most of the year, and according to Bloomberg Intelligence, has seen the tightest range since 2005.
• This year is all about market uncertainty, which will drive risk-off investments and greatly benefit gold, GFMS metals research analysts at Thomson Reuters said in the 2018 Gold Survey.
Gold prices will average $1,360 an ounce in 2018, with the potential to hit up to $1,500 an ounce on geopolitical risks, Cameron Alexander, director of metals demand at Thomson Reuters’ GFMS, told Kitco News in an interview this week. On the downside, GFMS doesn’t see prices falling below $1,270.
“There is still a lot of uncertainty around President Trump’s politics, ongoing tensions in the Middle East and Brexit negotiations. Those things will be the main drivers for gold this year,” Alexander said.
If any of the risks materialize, gold will see its best annual price action in five years, according to GFMS survey. This is very significant for gold investors, who have not seen gold prices trade near $1,500 levels since 2013.
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