Gold prices fell sharply on Tuesday, with the spot price dropping more than two percent to $4,898.53 per ounce by 06:22 GMT, reaching $4,862 earlier in the session – its lowest level in over a week. US gold futures for April delivery also declined, falling 2.6 percent to $4,917.70 per ounce.
The decline coincided with a period of reduced trading activity due to Lunar Novel Year holidays across several key Asian markets, including mainland China, Hong Kong, Singapore, Taiwan, and South Korea. US markets were also closed on Monday for Presidents’ Day, contributing to what analysts described as “thin liquidity.”
“Thin liquidity with the holidays in the last 24 hours, especially in China and Asia, but also obviously in the United States too, means we just lacked a bid in the market,” said Kyle Rodda, senior market analyst at Capital.com.
Adding to the downward pressure on gold, the US dollar index rose 0.2 percent against a basket of currencies, increasing the cost of gold for buyers using other currencies.
Market attention is now turning to the release of minutes from the Federal Reserve’s January meeting, scheduled for Wednesday. Investors are seeking further clues regarding the central bank’s monetary policy trajectory. Current market expectations, according to CME’s FedWatch Tool, point to a potential first interest rate cut in June.
“Now it’s going to be interesting to witness what these Federal Open Market Committee (FOMC) minutes say in the sense that the markets want many more rate cuts now than what the Fed said that it would do,” said Ilya Spivak, head of global macro at Tastylive. Lower interest rates typically support gold prices, as the metal offers a non-yielding alternative.
Geopolitical developments also appeared to influence trading. US President Donald Trump announced Monday his “indirect” involvement in US–Iran nuclear talks set to take place in Geneva on Tuesday. Simultaneously, representatives from Ukraine and Russia are scheduled to meet in Geneva this week for US-mediated peace discussions.
Other precious metals also experienced declines. Spot silver fell 2.8 percent to $74.46 per ounce, after an earlier drop exceeding 5 percent. Spot platinum decreased 2 percent to $2,000.27 per ounce, whereas palladium lost 2.4 percent to $1,682.23.
China’s evolving financial strategy, including a reduction in its holdings of US Treasury bonds and an increased focus on gold, has been a recent factor in global markets. Data from January 2026 indicated China’s US Treasury holdings had fallen to a 17-year low. Analysts have noted China’s substantial gold purchases as part of a broader effort to diversify its reserves and potentially reduce reliance on the US dollar, a strategy some observers link to a desire to counter US financial influence.
