Gold prices are set to record their steepest weekly decline since November 2024, as a stronger US dollar and renewed optimism in global trade reduce investor demand for safe-haven assets.
Spot gold fell 0.8% in early trading on Friday to $3,213.56 per ounce, pushing its total weekly loss to 3.3%. Despite the dip, the precious metal remains up 22% so far this year, largely fueled by market anxiety over President Donald Trump’s shifting trade policies and global economic uncertainty.
However, easing geopolitical tensions — particularly a thaw in the US-China trade standoff — have tempered investor appetite for gold. The metal had surged to a record high of over $3,300 an ounce just four weeks ago but has since faced a sharp correction.
The decline in gold has coincided with gains in the US dollar, which is poised to close its fourth straight week of appreciation. The dollar rose 0.4% this week, underpinned by solid US economic data and recalibrated expectations around the Federal Reserve’s interest rate outlook.
“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. The two economic giants agreed earlier this week to roll back some of the tariffs imposed in April, bolstering investor sentiment and risk appetite.
Additional economic indicators further contributed to the downturn in gold. Recent US data showed a moderation in producer prices and retail sales, along with softer-than-expected consumer inflation for April — developments that traders interpreted as signs of stabilisation in the world’s largest economy.
Gold is traditionally viewed as a hedge during periods of low interest rates and global instability. As conditions improve, the urgency to hold gold appears to be waning. Still, analysts say investor interest remains resilient.
“On the plus side, gold price dips continue to attract buyers,” said 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.”
Meanwhile, Bitcoin — another alternative asset — has surged past $100,000, rebounding more than 25% from its six-month low of $76,000, as improving sentiment drives risk-on trading across financial markets.
Though gold is currently under pressure, lingering macroeconomic risks — including inflation, trade volatility, and central bank uncertainty — continue to cast a long shadow over the broader financial landscape.
