Gold prices drifted lower on Tuesday as the dollar edged higher after the United States announced a 10% tariff on $200 billion in imports from China, starting next week.
The 10% rate will be applicable till the year-end, after which it would increase to 25% from January 1, 2019.
The move by the U.S. has escalated the trade tension between the world's two largest economies.
The Chinese government, which stated that the United States has not been "sincere" and it has no choice but to retaliate, has imposed tariffs on $60 billion in American products and this will be in force from September 24.
It is worth recalling that the U.S. President Donald Trump had warned that he would pursue tariffs on about $267 billion of additional imports if China takes retaliatory action.
The fact that the proposed tariff, at 10%, is much less than the 25% the U.S. had threatened, gives room for hopes that the two sides can still hold talks sometime soon to sort out issues.
Gold futures for December settled at $1,202.90 an ounce, down $2.90, or 0.2%, for the session. On Monday, gold futures ended up $4.70, or 0.4%, at $1,205.80 an ounce.
Silver futures for December ended down $0.038, at $14.185 an ounce.
Copper futures for December ended up $0.0795, at $2.7305 per pound.
A steady dollar too contributed to the yellow metal's decline. The dollar index was up 0.17 points, or 0.18%, at 94.26, after advancing to 94.32.
The dollar has been gaining ground on expectations of interest rate hikes and on hopes the U.S. may not lose much from the trade dispute with China.
The material has been provided by InstaForex Company -
www.instaforex.com