Bullion slid as much as 1.9% in early Asian trading on Wednesday, after closing down 1.3% in the previous session. Prices started to decline shortly after reaching the new all-time high of $3,500.10 an ounce on Tuesday as risk appetite improved, with equities bouncing back, while bonds and the dollar stabilized.
Investors were encouraged to start booking profits after the precious metal surged during April. Its 14-day relative-strength index — a gauge of the pace and intensity of moves — pointed to the asset as being overbought.
Gold’s rise has been underpinned by Trump’s aggressive trade war, increasing geopolitical tensions and concern he may be undermining US economic strength. The president alleviated some concerns over his leadership on Tuesday when he said that while he was frustrated Fed Chair Jerome Powell hadn’t moved quickly to cut rates, he has no intention of firing the central bank chief.
Trump also said levies on Chinese imports will come down “substantially” from their current 145% level. “We’re going to be very nice,” Trump said. “They’re going to be very nice, and we’ll see what happens. But ultimately, they have to make a deal, because otherwise they’re not going to be able to deal in the United States.”
Despite the two-day retreat, bullion is still up by more than a quarter this year after trade tensions and a worsening growth outlook boosted demand for safe assets. Strong buying from central banks and gold-backed exchange-traded fund investors have also supported prices.
Gold for immediate delivery fell 1.2% to $3,339.94 an ounce at 7:46 a.m. Singapore time. The Bloomberg Dollar Spot Index was up 0.3%. Silver and palladium edged higher, while platinum was steady.
