Gold prices edged lower in Asian trading on Tuesday, extending a modest retreat as a resurgent U.S. dollar and uncertainty over the Federal Reserve’s next policy steps pressured the non-yielding metal.

Spot gold fell 0.4% to $3,986.10 per ounce by 01:58 ET (06:58 GMT), while U.S. gold futures declined 0.5% to $3,994.30. The precious metal has struggled to maintain a foothold above the psychologically significant $4,000 level amid persistent dollar strength.

The greenback climbed to a three-month peak against major currencies on Monday, bolstered by diminished expectations for another Federal Reserve rate cut this year. Fed Chair Jerome Powell struck a cautious tone last week, stating that a December easing was “not a foregone conclusion,” prompting markets to pare back bets on near-term monetary loosening.

Compounding the uncertainty, Fed officials offered divergent views on Monday. Some stressed vigilance against lingering inflation risks, while others highlighted signs of cooling in the labor market—a split that reinforced doubts about the timing of future rate cuts and kept the dollar firmly supported.

Gold, which offers no interest, typically loses luster when borrowing costs remain elevated or the dollar strengthens, making bullion pricier for foreign buyers. The prospect of fewer rate reductions and rising real yields has dampened investor appetite.

Still, analysts noted that gold’s downside may be capped by ongoing fragility in U.S.-China trade relations. While recent diplomatic progress had eased tensions, fresh concerns over restrictions on advanced chip exports have reignited caution.

Other precious and industrial metals faced sharper declines under dollar pressure, with silver futures dropping 1.5% to $47.315 per ounce, platinum futures falling 1.3% to $1,557.85 per ounce, benchmark copper futures on the London Metal Exchange slipping 1.3% to $10,705.20 a ton, and U.S. copper futures also declining 1.3% to $4.99 a pound.

Market participants now await further clarity on U.S. monetary policy and geopolitical developments, with gold’s near-term trajectory likely to hinge on dollar momentum and shifts in rate-cut expectations. (ILKHA)