Gold futures fell 1% to $4,648.26 per ounce on Tuesday, paring earlier gains that had pushed spot gold to a three-month high. The retreat followed declines in U.S. Treasury yields and crude oil prices, which had supported the precious metal's recent advance.
U.S. spot gold was down 1.4% at $4,594.36 per ounce at 16:00 ET, according to market data. The decline came as the U.S. dollar index slipped nearly 1% in prior sessions, reducing pressure on gold priced in the currency. Analysts noted that the pullback reflected a consolidation after gold's recent strength, which was driven in part by concerns over fiscal policy and inflation.
The Federal Reserve's preferred inflation gauge, the core Personal Consumption Expenditures price index, rose 0.2% month-over-month in July, accelerating from June's pace. On an annual basis, core PCE increased 3.3%, matching expectations and remaining well above the central bank's 2% target. Headline PCE also rose 0.2% month-over-month and 3.7% year-over-year, aligning with forecasts. U.S. real GDP growth for the second quarter was unrevised at 1.5%, in line with consensus estimates.
New orders for manufactured durable goods rose 1.1% in July, outpacing the expected 0.4% increase, according to data from the U.S. Census Bureau. The CME FedWatch tool showed traders increasing bets on the Fed holding interest rates steady at its September meeting, with the probability rising to nearly 64% from about 60% the prior day.
Macquarie's Global FX and Rates Strategist Thierry Wizman said Fed Chair Kevin Warsh's upcoming speech at the Jackson Hole conference may strike a more hawkish tone than recent dovish remarks. Wizman noted that Warsh could emphasize long-term inflation risks while avoiding short-term policy signals, potentially surprising markets accustomed to his optimistic stance.
Geopolitical developments added to market uncertainty. Reports cited unnamed sources close to the Kremlin stating Russia was preparing to escalate attacks on Kyiv and infrastructure targets, with concerns over potential tactical nuclear strikes if peace negotiations fail. Separately, Russia's RIA Novosti reported an imminent U.S.-Iran ceasefire agreement, though the claim could not be independently verified. Iran and Oman also agreed on a temporary Strait of Hormuz route, with an Iranian official stating the waterway would not fully reopen until U.S. commitments from a June ceasefire framework were fulfilled.
