Gold prices extended their decline on Thursday after a sharp decrease in the previous session, triggered by the easing of trade tensions, which impacted demand for safe-haven assets, offsetting support from a weaker dollar.
In Dubai, gold rates were last trading lower, with 24-carat gold falling AED0.25 to AED407.5 and 22-carat gold declining AED0.25 to AED377.5. Additionally, 21-carat gold and 18-carat gold remained steady at AED362 and AED310.25, respectively.
Globally, spot gold fell 0.19 percent to $3,382.97 as of 5:01 GMT, after dropping 1.3 percent in the previous session. In addition, U.S. gold futures eased 0.28 percent to $3,388.10.
Dollar falls as trade talks progress
Gold prices appeared to be gearing up for a potential bullish run yesterday before news of the U.S.-Japan tariff deal prompted some profit-taking. The U.S. dollar also weakened significantly, which continues to lend support to gold prices. The dollar index fell 0.06 percent to 97.15 on Thursday, a more than two-week low, making greenback-priced bullion less expensive for other currency holders.
Analysts view the current movement as a minor retracement, with sentiment remaining broadly bullish on the precious metal.
Discussions between the U.S. and the European Union signalled progress on Wednesday. This came on the heels of President Donald Trump’s tariff agreement with Japan, which reduced auto import duties and exempted Japan from new tariffs in return for a $550 billion package of investments and loans directed toward the U.S.
Two European diplomats stated on Wednesday that the European Union and the United States are making progress toward a trade agreement that could feature a 15 percent baseline U.S. tariff on EU goods, with potential exemptions. This development could lay the groundwork for another significant trade deal, following the recent agreement with Japan.
European Central Bank to keep rates steady
Investors are also looking forward to the European Central Bank interest rate decision later in the day. The bank is set to keep interest rates on hold on Thursday, pausing after seven straight cuts as it awaited clarity surrounding Europe’s trade relations with the United States.
The ECB has halved its policy rate from 4 to 2 percent in just one year after taming a surge in prices that followed the end of the COVID-19 pandemic and Russia’s invasion of Ukraine.
Investors are also awaiting the release of the U.S. weekly jobless claims data today, and S&P Global’s flash PMI data to gauge economic health ahead of the Federal Reserve’s monetary policy decision next week.
Read: Oil prices rise to $68.8 on optimism over U.S. trade talks
Other precious metals
As gold prices declined, the precious metals market saw downward movement. Spot silver fell 0.54 percent to $39.07, while platinum lost a marginal 0.01 percent to $1,411.88. In addition, palladium dipped 0.63 percent to $1,270.03, while copper was trading higher at $5.79.
