Gold prices rose on Friday after witnessing a notable drop on U.S. President Donald Trump’s announcement of a trade deal with the U.K. Market focus now shifts to the upcoming U.S.-China talks this weekend.
In Dubai, gold rates marked major declines, with 24-carat gold losing AED11.75 in the last 24 hours to AED 397.25 and 22-carat gold declining AED10.75 to AED367.75. Additionally, 21-carat gold fell AED10.25 to AED352.75, while 18-carat gold dipped AED9 to AED302.25.
On Thursday, gold prices were trading only AED3.5 away from their all-time high. Prices then witnessed a major decline as trade tensions between the U.K. and U.S. eased. Gold prices are expected to remain volatile in the short term as the market awaits the outcomes of talks between the U.S. and China. If negotiations signal a positive development towards a trade deal between the world’s two largest economies, gold prices are expected to decline further, giving investors an opportunity to buy at the lows.
Globally, spot gold gained 0.18 percent to $3,309.89, as of 4:05 GMT, while U.S. gold futures rose 0.23 percent to $3,313.56. In the past week, bullion has gained over 2 percent.
U.S. signs “breakthrough deal” with U.K.
Gold prices dipped after Trump and British Prime Minister Keir Starmer announced a “breakthrough deal” on Thursday. A 10 percent tariff on goods imported from the U.K. remains in place, while Britain agreed to lower its tariffs to 1.8 percent from 5.1 percent and provide greater access to U.S. goods.
Despite the modest recovery in early trading, analysts expect high-level talks over the weekend between the U.S. and China to drive flows away from gold, further limiting price gains.
Market awaits Fed comments
Several U.S. Federal Reserve officials are due to speak later in the day for further insights into the economy and the Fed’s policy path. This comes after the Fed held interest rates steady on Wednesday and warned of rising inflation and unemployment risks.
“The Federal Reserve voted unanimously to leave interest rates unchanged between 4.25 percent and 4.50 percent at its May FOMC meeting, broadly in line with expectations. The rationale behind this move is that the U.S. economy remains on a solid footing, as evident from the persistent strength in hard economic data, particularly labor market reports,” stated Vijay Valecha, chief investment officer, Century Financial.
Gold prices thrive in a low-interest-rate environment since the metal is traditionally seen as a hedge against economic and political uncertainties.
Gold ETF inflows surge in April
In addition, the inflow into physically backed gold exchange-traded funds in April was the largest since March 2022, with China-listed funds leading the move due to the country’s trade war with the U.S., data from the World Gold Council showed on Thursday.
Gold ETFs saw an inflow of 115.3 metric tons worth $11.2 billion last month, the largest amount since March 2022, when global markets were grappling with the immediate consequences of Russia’s invasion of Ukraine. This move raised Gold ETFs’ total holdings by 3.3 percent to 3,560.8 tons by the end of April, the largest amount since August 2022. Their record was 3,915 tons in October 2020.
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Other precious metals
As gold prices remained volatile amid trade talks, the precious metals market was mixed on Friday. Spot silver fell 0.40 percent to $32.36, while platinum gained 0.17 percent to $977.29. However, palladium edged down 0.04 percent to $975.45.
