Gold prices are on course for their sharpest weekly decline in six months, weighed down by a stronger US dollar and renewed optimism following a de-escalation in US-China trade tensions.
Spot gold slipped 0.8% in early trading on Friday to $3,213.56 per ounce, bringing total losses this week to 3.3% — the worst weekly performance for the precious metal since November 2024.
While gold has still gained 22% year-to-date, largely driven by investor anxiety over President Trump’s fluctuating import tariff policies, easing geopolitical tension has prompted traders to reduce exposure to safe-haven assets. The metal hit a record high above $3,300 an ounce just four weeks ago.
Meanwhile, the US dollar has gained 0.4% this week and is on track for a fourth consecutive weekly gain, supported by resilient economic data and shifting expectations around the Federal Reserve’s interest rate policy.
“Gold prices faced heavy selling pressure this week as markets cheered a de-escalation in the US-China trade war,” said Ilya Spivak, head of global macro at Tastylive.
Earlier this week, the US and China agreed to temporarily reduce tariffs imposed in April, boosting investor sentiment. Data from the US also showed softer-than-expected producer prices and a slowdown in retail sales, while consumer inflation in April rose less than forecast.
Gold, typically favoured in periods of low interest rates and uncertainty, saw reduced demand as traders interpreted the data and diplomatic thaw as signs of stabilisation.
Still, analysts say gold continues to enjoy strong structural support.
“On the plus side, gold price dips continue to attract buyers,” noted Tim Waterer, chief market analyst at KCM. “That shows the precious metal remains a favoured asset, with the global growth and inflation outlooks still looking rather murky.”
In contrast, Bitcoin surged past $100,000 this week, rebounding more than 25% from last month’s six-month low of $76,000, as risk appetite returned to markets.
While gold’s current correction may reflect improved short-term sentiment, macroeconomic clouds — including uncertain trade dynamics, persistent inflation risk, and central bank policy shifts — continue to keep the outlook mixed for both precious metals and global markets.
