Gold slipped back to a one-week low on Tuesday as markets braced for US President Donald Trump's annual State of the Union address and news on US monetary policy. The speech and policy news will come amid positive consumer data and continuing fallout from a Republican memo alleging anti-Trump bias.
"A lot of this is repositioning for the State of the Union coming on tonight," said Josh Graves, senior commodities strategist at RJO Futures. "And the talk of this memo that has damaging information in it has the market a little spooked." Spot gold was down 0.22 percent at $1,336.99 an ounce by 1:49 p.m. EST (1849 GMT), earlier touching a one-week low of $1,334.10.
US gold futures for February delivery settled down $4.90, or 0.4 percent, at $1,335.40 per ounce. Markets are also bracing for potentially hawkish language from the US Federal Reserve, which ends its two-day policy meeting on Wednesday amid signs that US economic growth is picking up steam.
"On Friday US jobs data should confirm the strong picture for the US economy, which speaks in favour of rate rises and a strong dollar, so in the short term gold is under pressure," said Mitsubishi analyst Jonathan Butler. Investors will be closely watching Trump's annual State of the Union speech for comments on the dollar.
US Treasury Secretary Steven Mnuchin gave dollar bears a boost last week with a tacit endorsement of a weak US currency, though Trump later tried to row back from those comments. Gold hovered near its one-week low despite world equity markets taking their biggest two-day dive in six months, while the dollar index slipped back after climbing overnight.
In other precious metals, silver dropped 0.3 percent at $17.11 an ounce after touching a six-day low. Palladium was down 3.1 percent at $1,052.20 an ounce after hitting a five-week low at $1,047.00. Platinum was down 0.9 percent at $995 an ounce after touching $987.49, a one-week low. A surge in platinum prices this month has helped the metal used in autocatalysts to break above a downward trendline in place since early 2013.