Gold prices rallied on Tuesday, with the yellow metal recouping much of the hefty declines from a day earlier, when it posted the sharpest single-session decline in more than a year.
Investors favored haven assets, such as gold, on the back of weakness in the U.S. dollar and losses in the U.S. stock market.
Safe havens shined brightly Tuesday "as global slowdown worries are growing," said Edward Moya, senior market analyst at Oanda."The initial trade truce risk-on rally is over, and markets have little to show in hopes of a trade deal getting finalized anytime soon."
August gold GCQ19, -0.06% rose $18.70, or 1.4%, to settle at $1,408 an ounce. The precious metal saw prices drop $24.40, or 1.7%, on Monday, representing the steepest dollar and percentage decline for most-active futures contracts since June 2018, according to FactSet data.
"There is a continuity to buying the big dips, selling the big rallies as we also continue to stay in the new higher trading range [of] $1,385-$1,450," said George Gero, managing director at RBC Wealth Management, in a daily note. "Longer term, gold is still reacting to coming inflation. Most countries worry about a global slowdown, and lower rates continue in at least 22 countries. All this means most central banks are in favor of continued easing as well."
The ICE Dollar Index DXY, -0.01% a gauge of the greenback against major currencies, was off 0.2% Tuesday at 96.681, making commodities priced in the metal more attractive to buyers using other currencies. The metal also rose as benchmark debt yields edged back down. The Reserve Bank of Australia cut its benchmark interest rates for the second time in less than 30 days to combat signs of sluggish economic growth in the region, emanating from China.
The 10-year Treasury note TMUBMUSD10Y, -0.24% was yielding 1.978%, sliding back from Monday's levels. Lower rates can underpin demand for gold which doesn't offer a yield.
Risk assets received a modest boost on Monday after President Donald Trump and Chinese leader Xi Jinping reached a detente over the weekend at a G-20 gathering in Japan, bringing about a pause to a long-running dispute between the world's largest economies, which had undercut appetite for stocks and supported a flight to assets perceived as safe.
On Tuesday, other metals traded on Comex were mixed, with September silver SIU19, -0.10% up 0.3% at $15.238 an ounce, while September copper HGU19, -0.20% fell 0.9% at $2.664 a pound.
October platinum PLV19, -0.55% settled at $833.50 an ounce, down 0.4%, while September palladium PAU19, -0.50% added 0.5% at $1,552.80 an ounce.
Among exchange-traded funds, SPDR Gold Shares GLD, +0.16% added 1.5%.