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What’s happening: Gold prices recovered on Tuesday after recording losses in the previous session.
What happened: Gold prices staged their steepest decline since December 18 on Monday, following the launch of China’s low-cost AI model, DeepSeek.
Rising uncertainties around US President Donald Trump’s proposed tariffs also lent support to the safe-haven metal on Tuesday.
Why it matters: Traders moved to the sidelines on Monday, abandoning almost all asset classes to cover margins, on news of DeepSeek’s breakout success.
Traders flocked to safe havens on Tuesday, with uncertainties around the impact of DeepSeek’s popularity on US tech majors.
Gold prices were also supported by US President Donald Trump’s statements about imposing tariffs on imported computer chips, steel, aluminium, copper, and pharmaceuticals in a bid to boost domestic production. Trump’s proposed policies could potentially be inflationary and trigger trade wars.
The yellow metal is set to reach a record this year on heightened economic and inflationary concerns. Investors assessed the latest economic data from the US, which showed a decline in new orders for manufactured durable goods by 2.2% to $276.1 billion in December, after a 2% contraction in November.
Strength in the US dollar weighed on gold prices on Tuesday, as a higher greenback makes metals more expensive for foreign currency holders. The US dollar index, which measures the greenback’s performance versus a basket of major peers, gained around 0.5% to 107.87 on Tuesday.
US gold futures gained more than 1% to close at $2,767.50 an ounce on Tuesday.
In other metals trading, silver futures rose sharply to $30.882 an ounce and copper climbed to $4.2465. Platinum edged lower to $959.4, while palladium declined around 1% to $963.60.
What to watch: Investors await the US Federal Reserve’s first policy decision for 2025 today (2300 UAE Time), with markets expecting policymakers to keep interest rates unchanged. Markets will also look out for any signs of what the central bank intends to do this year, with Trump having said he wants rates to be slashed.
Context: Shares of General Motors fell sharply on Tuesday, despite the company reporting better-than-expected quarterly results.
Details: General Motors posted a surprise net loss for the latest quarter as it recorded billions in special charges due to recent changes to its business plans.
The automotive giant reported adjusted earnings of $1.92 per share, topping consensus estimates of $1.86 per share. Quarterly sales surged 11% to $47.70 billion, beating Wall Street expectations of $43.61 billion.
GM’s automotive operating cash flow under review grew by 1.6% year-over-year to $4.765 billion, while net income fell by more than $5 billion due to one-time charges, which included non-cash restructuring charges and the impairment of China joint ventures worth $4 billion.
Management guided to adjusted earnings of $11 to $12 per share for fiscal 2025, higher than market estimates of $10.84 per share. They said their guidance assumes a “stable policy environment” in North America. The company projected automotive operating cash flows in the range of $21 billion to $24 billion.
How shares responded: GM’s shares fell 8.9% to close at $50.04 on Tuesday, following the release of quarterly results. The stock has jumped around 41% over the past year.
What to watch: Investors will continue monitoring overall vehicle sales for the company, which are expected to significantly impact overall results ahead. Trump’s proposed tariffs and policies will also remain in focus.
Other Markets: European indices closed mostly higher on Tuesday, with the FTSE 100, DAX 40 and STOXX Europe 600 Index up by 0.35%, 0.70% and 0.36%, respectively, and the CAC 40 down by 0.12%.
Russian President Vladimir Putin said he was open to peace talks but would not speak directly to Ukraine’s President Volodymyr Zelensky. The news sent the RUB/USD pair slightly higher in forex trading this morning.
Sri Lanka’s central bank maintained its benchmark interest rates at 8.00%, lending support to the LKR/USD forex pair.
Australia’s monthly Consumer Price Index rose by 2.5% year-over-year in December, accelerating from 2.3% in November, sending the AUD/USD pair lower in forex trading this morning.
Colombia’s industrial confidence indicator rose to -0.2 in December, from a reading of -2.8 in the previous month, lending some support to the COP/USD forex pair.
US crude oil inventories grew by 2.86 million barrels in the week ending January 28, compared to a gain of 1 million barrels in the previous week, which sent WTI crude oil prices lower this morning.
Spain’s GDP growth rate (1200 UAE Time), Eurozone’s loans to companies (1300 UAE Time), loans to households (1300 UAE Time) and M3 money supply (1300 UAE Time), Italy’s business confidence (1300 UAE Time) and consumer confidence (1300 UAE Time), Mexico’s unemployment rate (1600 UAE Time), US MBA mortgage applications (1600 UAE Time), goods trade balance (1730 UAE Time), retail inventories (1730 UAE Time), wholesale inventories (1730 UAE Time), EIA crude oil stocks change (1930 UAE Time), EIA gasoline stocks change (1930 UAE Time) and EIA distillate stocks change (1930 UAE Time), Bank of Canada’s interest rate decision (1845 UAE Time), as well as Russia’s producer prices change (2000 UAE Time).
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