Gold prices dipped on Friday as signs of progress in trade talks between the U.S. and its trading partners weighed on demand for safe-haven assets. However, losses were limited by a broadly weaker U.S. dollar, which continued to support bullion prices.
In Dubai, gold rates declined, with 24-carat gold falling AED0.75 to AED405 and 22-carat gold declining AED0.5 to AED375.25. Additionally, 21-carat gold and 18-carat gold fell AED0.5 to AED359.75 and AED308.25, respectively.
Globally, spot gold lost 0.28 percent to $3,359.47 as of 5:23GMT, while U.S. gold futures dipped 0.31 percent to $3,363.20.
Weaker U.S. dollar limits losses in gold prices
Analysts noted that the recent dip in gold prices was largely driven by profit-taking from short-term bullish speculators, as optimism around trade deals began to emerge in the market. However, they added that the U.S. dollar remains on a weakening trend, and expectations of further Federal Reserve rate cuts continue to support gold prices near the $3,360 level.
The European Union and the United States appear to be moving toward a potential trade agreement, according to EU diplomats, which would impose a broad 15 percent tariff on EU goods entering the U.S. This potential deal comes after Wednesday’s announcement of a trade deal between the United States and Japan.
Easing global trade tensions boosted investor confidence, pushing the S&P 500 and Nasdaq to record closing highs overnight. Meanwhile, the U.S. dollar index was on track for its worst weekly performance in a month, making dollar-denominated gold more affordable for holders of other currencies.
Fed to keep interest rates steady
U.S. jobless claims unexpectedly declined last week, indicating a stable labor market, even as slow hiring continues to pose challenges for job seekers. The U.S. Department of Labor reported that the number of citizens submitting new applications for unemployment insurance fell for the sixth straight week, to 217,000 during the week ended July 19. This marked the lowest reading since mid-April.
Furthermore, the S&P Global’s US Composite PMI climbed to 54.6 in July from 52.9 in the previous month, marking the 30th straight month of expansion.
The Federal Reserve is widely anticipated to keep interest rates steady at its upcoming July 29–30 meeting. However, markets are still pricing in the possibility of a rate cut in September. Gold prices tend to thrive in a low-interest-rate-environment.
Read: Oil prices climb to $69.34 as trade talk optimism lifts demand outlook
Other precious metals
In line with the decline in gold prices, the precious metals market was down on Friday. Spot silver fell 0.33 percent to $38.95, while platinum dipped 0.88 percent to $1,395.95. In addition, palladium fell 0.83 percent to $1,217.84, and copper lost 0.03 percent to $5.78.
