Gold prices fell hard on Friday, dropping more than 1% by mid-morning, and closing in on their worst weekly decline since November 2024, according to data from Reuters.
Investors began pulling out after a temporary US-China tariff truce combined with a stronger dollar to hammer demand for the metal. As of press time, spot gold had fallen to $3,210.19 per ounce, while US futures also lost ground, slipping to $3,213.60.
Trump’s tour through Saudi Arabia and the UAE this week added pressure to the broader market environment. His meetings with Gulf leaders on AI and energy left investors wondering whether more abrupt trade shifts were around the corner.
Just weeks ago, the White House was threatening higher tariffs on Chinese imports, but by Monday, Washington had backed off, agreeing with Beijing to pause the tit-for-tat duties. Markets took that as a cue to move money out of safe havens like gold, which is often held during times of tension.
Trade deal cools gold as dollar holds strong
The market reaction was immediate. As talks between the US and China turned temporarily friendly, optimism flooded into riskier assets. But this was bad news for gold. Nitesh Shah, commodities strategist at WisdomTree, said on Friday:
“We’ve gone through a week where there have been optimistic signals in terms of trade negotiations and we have seen the dollar appreciate on the course, which is weighing on gold prices.”
The dollar index (DXY) stayed quiet Friday, but was heading for its fourth straight weekly gain, limiting gold’s appeal to foreign buyers. The rise in the greenback hurt demand because it makes gold more expensive in other currencies.
That’s a key reason why the metal has now lost more than 3% over the week, ending a month-long rally that saw it reach an all-time high of $3,500.05 per ounce in April.
That record peak had been driven by central bank buying, fears of a tariff war, and growing demand from investors who saw inflation as a real threat. But this week, things changed.
US economic numbers came in weaker than expected, suggesting growth might be slowing and inflation might be easing. That gave rise to fresh bets that the Federal Reserve would soon cut rates.
Normally, that would help gold. It doesn’t pay interest, so it performs better when rates are low. Tim Waterer, chief market analyst at KCM Trade, said:
“Gold price dips continue to attract buyers, which shows that the precious metal remains a favoured asset, with the global growth and inflation outlooks still looking rather murky.”
Outside of gold, other precious metals got hit, too. Silver dropped 1.2% to $32.28, platinum dipped 0.4% to $985.30, and palladium fell 1% to $958.56. Investors didn’t just pull out of gold—they were trimming exposure across the entire metals complex.
Fed bets grow as yields and dollar trade push back
The bond market added more weight to the pressure on gold. US Treasury yields dropped further, building on earlier declines from the start of the week. The 10-year note slid another 5 basis points to 4.41%, while the 2-year fell 3.5 bps to 3.94%.
Markets are now pricing in 59 basis points worth of Fed rate cuts by December, up from 49 bps earlier in the week. The chance of a 25 basis point cut by July is now at 40%. Francesco Pesole, rate strategist at ING, said:
“The dollar short-term rates relationship has loosened in the past two months, but the market’s bearish US dollar tendency means further dovish repricing could prove to be the catalyst for fresh dollar short building.”
In the currency market, the euro rose 0.2% to $1.1209, but was still down 0.34% for the week. That follows a strong March, when Germany rolled out a fresh stimulus package, and a big move in April, when Trump’s tariffs triggered a sudden dump of US assets after “Liberation Day.”
The yen also made gains as the dollar slipped 0.45%, ending its three-week climb against Japan’s currency. That came after weak GDP numbers from Japan and new comments from a Bank of Japan official suggesting policy may remain loose.
KEY Difference Wire helps crypto brands break through and dominate headlines fast
