Gold futures (GC=F) lost 0.5% to $5,053.80 a troy ounce, while spot prices were muted at $5,040.04 at the time of writing. Gold scaled a record high of $5,594.82 on 29 January.
Market focus is on a series of data releases, including December retail sales, January consumer price index figures and the January non farm payrolls report, which are expected to provide further signals on the US Federal Reserve’s interest rate path.
“Markets are in a wait and watch mode ahead of major US macro data later this week,” said Anil Deshpande, a Mumbai based commodities analyst, told local media. “Any surprise in jobs or inflation could quickly shift expectations on rate cuts and move precious metals sharply in either direction.”
Read more: FTSE 100 LIVE: London stocks fall and Europe mixed as Starmer shores up position as PM
Precious metals have retreated from record highs reached at the end of January, after a rally that many traders said had gone too far too fast, triggering profit taking across bullion markets.
Investors are currently pricing in at least two interest rate cuts of 25 basis points in 2026, with the first potentially in June. Gold, which does not offer a yield, typically benefits from lower interest rate environments.
Brent crude (BZ=F) futures was muted at $69.03 a barrel, while West Texas Intermediate (CL=F) lost 0.2% to $64.21 at the time of writing.
The moves followed gains of more than 1% on Monday, after the US Department of Transportation’s Maritime Administration advised US flagged commercial vessels to remain as far from Iran’s territorial waters as possible and to verbally decline permission for Iranian forces to board if requested.
Read more: BP suspends share buyback programme amid weaker oil prices
Roughly a fifth of global oil consumption passes through the Strait of Hormuz between Oman and Iran, making any escalation in the region a significant risk to global supplies.
“While talks in Oman produced a cautiously positive tone, lingering uncertainty over potential escalation, sanctions tightening or supply disruptions in the Strait of Hormuz has kept a modest risk premium intact,” said Tony Sycamore, an analyst at IG.
The pound was up 0.2% lower against the dollar at $1.3674 and up 0.1% down against the euro at €1.1476.
The US dollar index (DX-Y.NYB), which measures the currency against a basket of six major peers, was flat at 96.86.
Hedge funds have increased bets against sterling as concerns grow over Starmer’s position as prime minister. The pound fell as much as 0.7% against the euro on Monday amid fears that a change in Labour leadership could trigger a leftward shift in policy.