Gold prices fell on Tuesday as investors took profits after a record high, but remained optimistic amid fears of a global trade war spurred by U.S. President Donald Trump's new tariffs.
Spot gold was down 0.1% at $2,904.87 an ounce by 13:41 ET (1841 GMT), after hitting a high of $2,942.70 earlier in the session.
U.S. gold futures were down 0.1% to close at $2,932.60.
"Just seeing some profit-taking by short-term futures traders...the market is overextending a little bit and getting ready for some downward corrective pressure and some consolidation on the charts," said Jim Wyckoff, senior market analyst at Kitco Metals.
Trump substantially increased tariffs on steel and aluminum imports to a flat 25% "with no exceptions or exemptions," in a move that he hopes will help struggling industries in the United States, but also risks triggering a trade war on multiple fronts.
Traders are watching Wednesday's U.S. inflation data for fresh clues on the outlook for interest rates in the world's largest economy.
A Reuters poll showed that the Fed is expected to wait until next quarter before cutting rates again. Tariffs could boost U.S. inflation and postpone rate cuts.
Federal Reserve Chairman Jerome Powell said the central bank is in no rush to cut interest rates given an economy that is "strong overall" and inflation that remains above its 2% target.
Powell's remarks were part of his opening remarks prepared for delivery at a Senate Banking Committee hearing.
"Higher-than-expected inflation readings could extend the Fed's rate pause, which could cause gold's performance to moderate in the near term," said Ryan McIntyre, senior portfolio manager at Sprott Asset Management.
Gold bullion is considered an inflation hedge, but higher interest rates reduce the attractiveness of this non-yielding asset.
In the face of any new proclamations from President Trump, potential uncertainty could underpin prices, and profit-taking scenarios, such as today's, could be viewed by bullish traders as a buying opportunity during a price decline, Wyckoff said.
Among other metals, spot silver fell 0.4% to $31.92 an ounce, platinum was down 0.8% to $986.03 and palladium lost 0.3% to $980.25.
Anmol Choubey, Reuters