Gold prices fell on Friday, positioning the precious metal for its worst weekly performance since November 2024, as a strengthening U.S. dollar and easing trade tensions between the U.S. and China dampened its appeal as a safe-haven asset.
As of 04:29 GMT, spot gold was down 0.8% to $3,213.56 per ounce, bringing its weekly loss to 3.3%. U.S. gold futures were also lower, slipping 0.3% to $3,217.20.
Dollar Strength Weighs on Gold
The U.S. dollar has risen 0.4% this week, on track for its fourth consecutive weekly gain. A stronger dollar makes dollar-denominated gold more expensive for holders of other currencies, adding downward pressure to prices.
“Gold prices faced heavy selling pressure this week as markets cheered a de-escalation in the U.S.-China trade war,” said Ilya Spivak, Head of Global Macro at Tastylive.
Earlier in the week, both nations agreed to temporarily roll back the tit-for-tat tariffs that were reinstated in April, calming markets and reducing demand for safe-haven assets like gold.
Economic Data and Rate Outlook Add Complexity
Several recent U.S. economic reports have added to market uncertainty. Producer prices unexpectedly declined in April, while retail sales growth slowed. Meanwhile, consumer prices rose less than expected, reinforcing expectations that inflation is cooling.
Federal Reserve Governor Michael Barr commented on Thursday that the U.S. economy remains resilient and inflation is moving toward the central bank’s 2% target. However, he also noted that trade policy uncertainty continues to cloud the economic outlook.
Markets are currently pricing in approximately 57 basis points of interest rate cuts by the Federal Reserve this year, with the first move anticipated in September. Lower interest rates generally support gold, which does not yield interest, by reducing the opportunity cost of holding the metal.
Investor Sentiment Remains Cautiously Supportive
Despite the week’s downturn, analysts say investor interest in gold remains intact. “On the plus side, gold price dips continue to attract buyers, which shows that the precious metal remains a favoured asset, with the global growth and inflation outlooks still looking rather murky,” said Tim Waterer, Chief Market Analyst at KCM Trade.
Broader Precious Metals Market Also Slips
Other precious metals followed gold’s decline. Spot silver fell nearly 1% to $32.37 an ounce. Platinum eased 0.5% to $984.83, while palladium dropped 1.2% to $956.43.
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