Gold prices gained more than 1 percent on Thursday as investors rushed to buy the low as bullion hit a one-week low in the previous session amid optimism over a U.S.-China trade deal.
In Dubai, gold rates recovered some of the previous session’s losses, with 24-carat gold rising AED3.5 to AED400.75 and 22-carat gold rising to AED3.25 to AED371.25. Additionally, 21-carat gold gained AED3.25 to AED356, while 18-carat gold edged up AED2.5 to AED305.
Globally, spot gold gained 1.30 percent to $3,328.22, as of 4:06 GMT, while U.S. gold futures rose 1.35 percent to $3,338.52.
Non-yielding gold, traditionally seen as a hedge against economic and political uncertainty, hit a record high of $3,500.05 on Tuesday but fell below the $3,300 level on Wednesday.
U.S.-China trade deal hopes rise
“Gold’s meteoric rise underscores a broader trend in the commodities space, which continues to be heavily influenced by macroeconomic and geopolitical developments, particularly the intensifying trade war between the United States and China,” stated Ole Hansen, head of commodity strategy, Saxo Bank.
U.S. Treasury Secretary Scott Bessent said on Wednesday that the high tariffs between the U.S. and China are unsustainable and must be reduced before trade negotiations can proceed. However, he noted that President Donald Trump would not unilaterally cut tariffs on Chinese imports.
Trump also expressed optimism that a trade deal with China could “substantially” reduce tariffs on Chinese goods, hinting that the final deal will not “be anywhere near” current tariff rates.
Meanwhile, Trump is planning to relieve carmakers from some tariffs following intense lobbying by industry executives over recent weeks.
“Together with a softening stance on China tariffs and renewed hopes for a peaceful solution to the Russia-Ukraine war, the market got an injection of adrenaline, which helped send stock markets sharply higher while the U.S. dollar regained some ground. Having benefited greatly from market worries, gold prices went in the opposite direction, losing 5 percent within a short period of time as fear-of-missing-out and momentum trades exited the market,” added Hansen.
U.S. dollar’s dip supports bullion
The International Monetary Fund said on Wednesday that tariffs will slow growth and push debt higher across the globe. U.S. economic growth will surpass the IMF’s revised estimate of 1.8 percent, down from 2.7 percent in January, if the Trump administration’s policies are implemented, Bessent said.
The dollar index fell 0.14 percent against its peers, making gold prices cheaper for other currency holders.
The Federal Reserve’s Beige Book revealed that pervasive uncertainty over Trump’s shifting tariff plans threatens to impact growth in the months ahead. The report also revealed that consumer spending remains mixed, while the labor market has shown signs of cooling after stalling or edging lower in many Fed districts, pointing to a gloomy outlook.
The prospects for a more aggressive policy easing by the Fed offered additional support to gold prices following their recent dip. Traders now see a 55.3 percent chance of the Fed cutting rates in June, according to the CME FedWatch tool.
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Other precious metals
As gold prices recovered some of their recent losses, the precious metals market saw downward movement on Thursday. Spot silver fell 0.71 percent to $33.31 while platinum dipped 0.65 percent to $966.43 and palladium declined 0.65 percent to $937.73.
