Gold prices edged lower Tuesday as an agreement between the U.S. and North Korea aimed at denuclearizing the Korean Peninsula muted demand for haven metals, ahead of an expected interest-rate hike by the Federal Reserve.
The move came as a report showed U.S. consumer inflation is trending higher, a signal that markets believe will push the Federal Reserve into raising interest rates this week and possibly again later this year.
Read: Here’s why stock-market investors are so relaxed about trade wars and North Korea
August gold GCQ8, -0.14% fell 60 cents, or less than 0.1%, to $1,302.60 an ounce after an earlier decline to a low of $1,296.30.
Stocks were mixed, but largely held their ground in the wake of the geopolitical headlines.
“In general, the lowering of geopolitical risks are a good thing, but the lack of specifics from the meeting — including a lack of timelines — leave little to trade on and so the impact on markets from the summit has been negligible,” said Chris Zaccarelli, chief investment officer with Independent Advisor Alliance.
U.S. President Donald Trump and North Korean leader Kim Jong Un signed a joint document pledging to work toward the complete denuclearization of the Korean Peninsula, but the statement was criticized as lacking detail on the verification of the process.
Read: The pact Trump and Kim signed in Singapore.
And see: The transcript of Trump’s press conference after meeting Kim Jong Un
Competition for market attention also fixed on interest-rate policy. The Federal Reserve is expected to raise interest rates after its two-day meeting, which ends Wednesday. European Central Bank policy makers are expected to announce the timing of a reduction of its crisis-era asset-purchase initiative when it meets on Thursday.
Michael Armbruster, managing partner at Altavest, said he continues to “look for gold to trade sideways to lower based on rising U.S. interest rates and a strengthening U.S. dollar.”
“Gold has a history of making big moves in the wake of FOMC announcements,” he said. “Typically, those big post-FOMC moves tend to be on the downside. My advice to gold bugs is to keep your powder dry.”
On Tuesday, the ICE U.S. Dollar Index DXY, -0.04% a measure of the dollar against a half-dozen major currencies, was little changed. It has climbed by nearly 4% so far this quarter, helping to put pressure on dollar-denominated gold prices, which have lost roughly 2% for the quarter, according to FactSet Data.
See: Who will call the stock-market tune: Fed, ECB, Trump or Kim Jong Un?
As for Tuesday’s economic data, government data showed that the consumer-price index has risen 2.8% in the past 12 months, up from 2.5% in April. That’s the highest level since early 2012. The yearly increase in the core rate edged up to 2.2%. Inflation can be a mixed bag for gold; it can put pressure on central banks to hike rates, hurting nonyielding bullion, but gold has historically maintained a role as an inflation hedge for long-term investors.
Meanwhile, July silver SIN8, -0.10% fell 0.1% to $16.93 an ounce. July copper HGN8, -0.17% was at $3.254 a pound, down 0.1%.
Read Long-term bull run for copper could see prices top $10 a pound: analyst
July platinum PLN8, -0.54% lost 0.2% to $904.80 an ounce, while September palladium PAU8, -0.03% rose 30 cents to $1,016.80 an ounce.
Among exchange-traded funds, SPDR Gold Shares GLD, -0.29% fell 0.2%. The iShares Silver Trust SLV, -0.22% was down 0.2%, and the VanEck Vectors Gold Miners ETF GDX, -0.40% fell 0.3%.