Gold hovers near one-week low as US-China trade tensions ease

On Tuesday, gold prices hovered near a weekly low reached a day earlier, following a 2.7% fall. The market was pressured by a temporary agreement between the US and China to suspend tit-for-tat tariffs, which boosted investors' risk appetite and diminished the safe-haven appeal of precious metals.

After two days of talks in Geneva, both sides agreed to cut duties for three months. The US will reduce tariffs on Chinese imports from 145% to 30%, while China is set to lower fees on American goods from 125% to 10%.

In addition, Adriana Kugler, a member of the Federal Reserve Board of Governors, noted that eliminating duties is likely to mitigate the need for further monetary easing in a weakening economy.

Today, market participants are awaiting a report on US inflation, which could impact the Fed's future decisions. Traders are now expecting a 55 basis point rate cut by year-end, starting in September.

Gold, typically considered a safe-haven asset, is sensitive to interest rate movements and tends to appreciate when rates are lowered, as reported by Reuters.