Gold prices fell by as much as 1% on Tuesday, influenced by two main factors: ongoing thin trading due to the Lunar New Year holiday in major Asian markets, leading to insufficient liquidity, and a stronger U.S. dollar putting downward pressure on the metal. Specifically, spot gold dropped 1% during early trading. As of the latest update, gold was down 0.68% to $4,956.65 per ounce, while the U.S. gold futures contract for April delivery declined 0.83% to $4,972.89 per ounce.
Due to the Lunar New Year holiday, markets in mainland China, Hong Kong, Singapore, and South Korea remained closed. U.S. stock markets were also shut on Monday for the Presidents' Day holiday. Against this backdrop, the U.S. dollar index rose 0.2% to a higher level against a basket of currencies, making dollar-denominated gold more expensive for holders of other currencies and indirectly weighing on its price.
Additionally, according to the latest data from the CME FedWatch Tool, markets currently expect the Federal Reserve to cut interest rates three times this year, each by 25 basis points. Non-yielding gold often performs well in a low-interest-rate environment.
In the geopolitical sphere, a temporary easing of safe-haven sentiment has become a significant factor pressuring gold prices. U.S. President Donald Trump recently confirmed aboard Air Force One that he would indirectly participate in the second round of U.S.-Iran nuclear negotiations scheduled to take place in Geneva, Switzerland. In his remarks, Trump acknowledged Iran's tough stance as a negotiator but also suggested that Tehran has shown unprecedented willingness for dialogue following last year's targeted U.S. strikes on Iranian nuclear facilities.
This shift from confrontation to diplomatic engagement has caused the "war premium" that previously supported gold prices to fade. Investors widely expect that if the Geneva talks yield substantive progress, gold's appeal as a safe-haven asset will further diminish. However, the current negotiation landscape remains highly uncertain. While Trump expressed a preference for resolving the nuclear issue through diplomatic channels, the U.S. Navy has deployed a second aircraft carrier strike group to the Middle East. This dual strategy of military deterrence and peace talks has kept markets on high alert.
Although gold prices have declined in the short term due to eased geopolitical tensions, the long-term premium logic for gold—as a core asset hedging against systemic uncertainty—remains intact, considering global debt pressures and the Trump administration's hawkish economic appointments.
It is worth noting that alongside gold's decline, other precious metals also fell. Spot silver dropped 1.99% to $75.09 per ounce, at one point falling more than 3% to a recent low. Meanwhile, spot platinum declined 0.30% to $2,014.77 per ounce, and palladium fell 0.16% to $2,017.68 per ounce.