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Gold prices dropped back below $3,200 on Friday, heading towards their worst week in six months, with market sentiment tilting towards riskier assets as the US makes progress in its trade negotiations.
Spot gold fell 1.9% to $3,180.46 an ounce by 10:30 a.m. ET, erasing most of its gains from Thursday. US gold futures also dipped 1.2% to $3,187.00 an ounce in New York.
Meanwhile, the US dollar index is tracking towards its fourth straight weekly gain, despite being subdued on the day.
“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,” said Nitesh Shah, commodities strategist at WisdomTree.
Earlier this week, the US and China agreed to temporarily slash the harsh tit-for-tat tariffs imposed in April, lifting sentiment in the wider financial markets. The outcome of US President Donald Trump’s subsequent visit to the Middle East also boosted investor confidence.
Offering some respite to gold, signs of slowing inflation and weaker-than-expected US economic data this week cemented bets of more Federal Reserve rate cuts this year.
“On the plus side, 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,” said Tim Waterer, chief market analyst at KCM Trade.
Despite the recent pullback, the precious metal remains one of the best-performing assets this year, rising by nearly 24%. Last month, it scaled past the $3,500-an-ounce level, adding to the many milestones it achieved in 2025.
Major banks including JPMorgan and UBS are predicting gold to rise even further and surpass that mark within the next few months, with the former forecasting $4,000 by the second quarter of 2026.
(With files from Reuters)