Gold hits one-week low as investors cash in, trade war fears persist

Gold prices dropped to their lowest level in over a week on Tuesday, as investors booked profits after a record high in the previous session on ongoing fears of instability around U.S. President Donald Trump's tariff plans.

Spot gold fell 1.5% to $2,906.50 an ounce, hitting its lowest level since February 17, earlier in the session. Gold hit its highest level at $2,956.15 on Monday.

U.S. gold futures declined 1.4% to $2,920.4.

"You are seeing profit-taking as well as people looking to get to the sidelines and to re-establish positions at a lower price," said Bob Haberkorn, senior market strategist at RJO Futures.

Safe-haven gold has hit eleven record highs this year so far, surpassing the significant $2,950/oz milestone.

Trump said on Monday that tariffs on Canadian and Mexican imports were "on time and on schedule" despite efforts by the countries to beef up border security and halt the flow of fentanyl into the U.S. ahead of a March 4 deadline.

"I still think that there's enough uncertainty out there associated with tariffs (and) trade more generally... dips are going to continue to be viewed as buying opportunities," said Peter Grant, vice president and senior metals strategist at Zaner Metals.

Gold speculators cut net long positions by 13,605 contracts to 201,962 in the week to February 18, while SPDR Gold Trust holdings rose to 904.38 metric tons on Friday, the highest since August 2023.

Meanwhile, investors and economists expect the U.S. Federal Reserve to respond "strongly and systematically" to changes in inflation and the labor market, according to research published on Monday by the San Francisco Fed.

Higher inflation may force the Fed to keep rates higher, tarnishing non-yielding gold's appeal.

Investors now await Friday's release of the U.S. Personal Consumption Expenditures report, the Fed's preferred inflation gauge, for insights into the central bank's rate-easing path and monetary policy.

Spot silver shed 2.5% to $31.53 an ounce, platinum dropped 0.4% to $962.99 and palladium lost 1.8% to $923.88.