Gold prices hit over a one-month low on Thursday ahead of the release of key U.S. data, which is expected to provide insights into the Federal Reserve’s monetary policy trajectory. Easing of U.S.-China trade tensions also weighed on bullion’s appeal.
In Dubai, gold rates saw significant declines, with 24-carat gold losing AED6.75 to AED378.5 and 22-carat gold declining AED6 to AED350.5. Additionally, 21-carat gold dipped AED5.5 to AED336.5, while 18-carat gold saw a decline of AED5.25 to AED288.
Globally, spot gold fell 1.20 percent to $3,148.6 as of 4:23 GMT, after hitting its lowest level since April 10 earlier in the session. Meanwhile, U.S. gold futures fell 1.22 percent to $3,149.56.
Easing trade tensions pressure gold prices
Gold prices declined as the United States and China agreed to reduce tariffs and adopt a 90-day pause. This agreement signaled the de-escalation of a trade war between the world’s two largest economies. Despite the uplift in sentiment, global markets remained uncertain about the outcome after the 90-day pause ends.
“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,” stated Ole Hansen, head of commodity strategy, Saxo Bank.
The easing of trade tensions between the United States and China supported markets, shifting investor focus from safe havens to riskier assets. In an interview on Tuesday, U.S. President Donald Trump said he could see himself dealing directly with Chinese President Xi Jinping on details of a trade pact. He also said that “potential deals” with India, Japan and South Korea were in the works.
Gold, known as a safe haven in times of geopolitical and economic turmoil, scaled a record high of $3,500.05 last month. Gold prices are up 21.3 percent so far this year.
“With several key structural drivers unlikely to dissipate in the near term, we continue to view the risk as skewed toward even higher prices over time. In the very short term, gold continues to consolidate, with the technical outlook raising the risk of a deeper correction towards a key area of support in the $3,155 to $3,165 area,” added Hansen.
Producer price data in focus
Market focus now shifts to the U.S. producer price index (PPI) data, due at 12:30 GMT, following the softer-than-expected consumer data. Earlier this month, Fed policymakers held interest rates steady while they tried to gauge the impact of Trump’s tariffs and trade negotiations on prices and the economy. Fed Chair Jerome Powell is also set to deliver a speech later in the day.
Fed Vice Chair Philip Jefferson warned that announced tariffs and the uncertainty surrounding U.S. trade policy could derail any recent progress on inflation. Jefferson added that the recent inflation data show further progress toward the 2 percent target and described the current policy stance as well-positioned to respond to developments that may arise.
Markets are now expecting 50 basis points of Fed interest rate cuts this year, starting from October instead of July, as previously anticipated. Gold, traditionally seen as a hedge against economic and political uncertainties, thrives in a low-interest-rate environment.
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Other precious metals
As gold prices continued to decline, the precious metals market was mixed on Thursday. Spot silver fell 1.14 percent to $31.84, while platinum gained 0.50 percent to $980.88. However, palladium dipped 0.22 percent to $948.82.
