Gold prices declined on Friday and were set for their biggest weekly decline in six months, as a stronger dollar and easing trade war concerns dampened the yellow metal’s appeal as a safe-haven asset.
In Dubai, gold rates also declined, with 24-carat gold losing AED0.5 to AED387.75 and 22-carat gold declining AED0.25 to AED359.25. Additionally, 21-carat gold and 18-carat gold dipped AED0.25 to AED344.50 and AED295.25, respectively.
Globally, spot gold fell 0.33 percent to $3,213.76 as of 5:34 GMT. Bullion has lost 3.3 percent so far this week and is set for its worst weekly performance since November 2024.
Meanwhile, U.S. gold futures fell 0.21 percent to $3,219.77.
The U.S. dollar has gained 0.4 percent so far this week and is set for its fourth straight weekly gain, making gold more expensive for other currency holders.
Trade war de-escalation impacts safe havens
“The massive de-escalation in tariffs announced by the U.S. and China on Monday saw gold fall back. While the truce lowered the risk of a recession, supporting a massive risk-on move across other assets, most notably the stock market, the news also helped send the USD higher against its major peers,” said Ole Hansen, head of commodity strategy, Saxo Bank.
Earlier this week, the United States and China agreed to reduce tariffs and adopt a 90-day pause, triggering a major decline in gold prices. Both sides said they would drop trade tariffs imposed since U.S. President Donald Trump’s April 2 announcement.
U.S. Treasury Secretary Scott Bessent said the two sides had agreed on a 90-day pause on measures and that tariffs would come down by over 100 percentage points to a 10 percent baseline rate.
This agreement signaled the de-escalation of a trade war between the world’s two largest economies and impacted demand for safe-haven assets like gold.
“A ceasefire between Pakistan and India, as well as intense focus on a Russia–Ukraine solution, also helped lower the geopolitical temperature, reducing the need for safe havens,” added Hansen.
U.S. economy remains solid
Gold prices also declined after data showed U.S. producer prices fell unexpectedly in April and retail sales growth slowed. The producer price index for final demand dropped 0.5 percent last month after an upwardly revised unchanged reading in March, the Labor Department’s Bureau of Labor Statistics said on Thursday. This set of data came following the softer-than-expected consumer price data.
On Thursday, Federal Reserve Governor Michael Barr said the U.S. economy is on solid footing with inflation heading to the central bank’s 2 percent target, but trade policies have clouded the outlook.
Markets are now pricing in 57 basis points of rate cuts this year, with the easing projected to start in September. Gold, traditionally seen as a hedge against economic and political uncertainties, thrives in a low-rate environment.
The decline in gold prices continues to attract investors, said analysts, which shows that the precious metal remains a favorable asset, especially amid economic uncertainty surrounding the impact of Trump’s tariffs.
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Other precious metals
As gold prices continued to decline, the precious metals market was in the red on Friday. Spot silver fell 0.71 percent to $32.44, while platinum lost 0.06 percent to $989.12. In addition, palladium dipped 1.17 percent to $957.11.
