Gold prices declined on Friday but were on track for a third weekly gain as investors maintained an optimistic outlook while they assessed developments in the U.S.-China trade negotiations.
In Dubai, gold rates held steady, with 24-carat gold remaining at AED403 and 22-carat gold at AED373. Additionally, 21-carat gold held at AED357.5, while 18-carat gold reached AED306.5.
Globally, spot gold dipped 0.18 percent to $3,328.7, as of 4:06 GMT, while U.S. gold futures declined 0.37 percent to $3,336.05. Non-yielding gold, traditionally seen as a hedge against economic and political uncertainty, hit a record high of $3,500.05 on Tuesday.
Gold’s pullback remains limited
Despite the recent decline in gold prices from their $3,500 record high, the pullback has so far been limited as investors continue to view the precious metal as a compelling hedge amid ongoing uncertainty.
U.S. President Donald Trump said on Thursday that trade talks between the U.S. and China are underway, pushing back against Chinese claims that no discussions have taken place to ease the ongoing trade war. Meanwhile, a spokesperson for China’s commerce ministry stated that if the U.S. wants to resolve the trade dispute, it should lift all unilateral tariff measures against China.
Bullion has surged over $700 this year, setting multiple record highs. In the last 30 days alone, gold prices have gained over 9 percent. Signs of easing tensions between the U.S. and China, the world’s two largest economies, and a modest rise in the U.S. dollar have impacted gold’s ability to capitalize on the previous day’s gains.
The U.S. dollar drew some support from mostly upbeat U.S. macro data released on Thursday, rising 0.49 percent to 99.87 and making bullion more expensive for other currency holders.
Fed officials say June interest rate cut possible
Federal Reserve officials noted that they saw no urgency in revising the monetary policy as they sought more information to determine how the Trump administration’s tariffs were affecting the economy. Traders currently see around 84 basis points worth of rate cuts by 2025-end.
Cleveland Fed President Beth Hammack stated that a rate cut as soon as June could be possible if clear and convincing data on economic direction is obtained. Meanwhile, Fed Governor Christopher Waller said in an interview that he would support rate cuts if tariffs start weighing on the job market.
Markets closely watch interest rate expectations set by the Federal Reserve, as they heavily influence the attractiveness of gold prices. Currently, the futures market is suggesting a more accommodative monetary policy. Lower interest rates reduce the opportunity cost of holding gold, thereby supporting its price.
On the geopolitical front, a Russian missile attack on Ukraine’s capital Kyiv killed at least twelve people and injured dozens. This was one of the deadliest strikes since Russia launched its full-scale invasion more than three years ago, keeping the geopolitical risk premium in play.
Read: Dubai gold prices reach all-time highs as cultural festivals boost demand
Other precious metals
As gold prices declined, the precious metals market saw a downward movement on Friday. Spot silver fell 0.27 percent to $33.48 while platinum dipped 0.32 percent to $967.60 and palladium declined 1.19 percent to $942.49.
