Gold prices witnessed a significant decline in trading on Thursday, as the precious metal fell below $2,900 per ounce, affected by the rise in the US dollar. This came against the backdrop of the continued threats issued by US President Donald Trump to increase trade tariffs, which led to a decline in gold. Prices had witnessed a record rise in previous days, but these threats brought pressure on the yellow metal.
Gold has a strong reputation as a safe haven in times of crisis. However, the rise in the US dollar limits the attractiveness of gold, as the stronger US currency makes gold more expensive for investors abroad. Although there is great demand for gold as a safe haven in light of economic and political turmoil, the strong dollar played a role in pushing prices down.
A wave of profit-taking on gold
At the beginning of the week, gold recorded new record highs, with the price of an ounce reaching $2,956.37, but this did not last long. As global trade tensions escalated, investors began to book profits after making significant gains, which pushed prices down significantly. At the same time, demand for gold remained despite the price volatility. Gold is traditionally the best option for investors looking to preserve their money in an unstable environment in such circumstances.
But the difficulty of gold prices exceeding the $3,000 level was clear. In spot transactions, gold fell by 0.9% to $2,890.73 per ounce. Gold futures expiring in April also fell by 0.9% to $2,903.39 per ounce. However, with expectations of higher US interest rates, gold may face significant challenges in the near future.
Reports of a deal between Russia and Ukraine
Another factor that affected gold this week was reports that a peace deal between Russia and Ukraine was close to reaching a conclusion with the United States’ mediation. Typically, demand for gold is greatly affected during times of peace and rapprochement between conflicting countries, reducing the need for safe haven investments. Although the situation in Ukraine is still very unstable, this news has had clear effects on the market.
The US Dollar Strengthens Again
The US currency recovered from its lowest levels in two and a half months. With expectations of moderate weekly gains, the dollar began to rise as concerns about tariffs on basic goods increased. The new economic data released contributed to improving the image of the dollar, with the spotlight on indicators of US GDP and consumer spending. This improvement in the dollar had a double effect on precious metals, as it reduced the attractiveness of gold and led to a decline in the prices of many other metals.
Gold Heads for Weekly Losses Despite Reaching a Record High
Although gold recorded an all-time high at the beginning of the week, price expectations indicate weekly losses that may reach 2%. Among the main reasons for this decline were profit-taking after prices reached high levels, in addition to effects of US tariffs on the global economy. Gold prices are expected to fall between 1.4% and 2% this week.
Trump’s comments heighten trade concerns
In another development, US President Donald Trump said earlier this week that tariffs on European goods will reach 25%. He also added that tariffs on Mexico and Canada may be postponed until early next month. These comments further raised market concerns and increased uncertainty in global economy. Despite his repeated threats to impose tariffs on imports, the dollar remained on a relatively recovery path.
Other metals prices under pressure
Other metals were also affected by the market volatility, with platinum futures down 0.2% at $973.20 an ounce. Silver futures were also down 0.7% at $32,050 an ounce. Even copper was not immune to the decline, with LME copper prices expected to post a weekly loss of more than 1%. The US president had earlier threatened to impose tariffs on copper imports, which added to the tensions in the metals market.
Impacts on US interest rate outlook
The dollar’s recovery from its monthly lows comes at a sensitive time, as investors await more economic data that could influence monetary policy. Among the important data releases is the US fourth-quarter GDP report, which will be the focus of markets. The personal consumption expenditures (PCE) index, the Federal Reserve’s preferred measure of inflation, will also influence the interest rate outlook. Markets await US inflation data
All eyes are on the Personal Consumption Expenditures (PCE) report, which will be released on Friday. This report will provide investors with an understanding of the path of inflation in the US economy, which will have a significant impact on expectations regarding the Federal Reserve’s interest rate hike or cut. Any stronger-than-expected results may indicate a tighter monetary policy, which will negatively impact gold.
Despite the current declines in gold prices, many analysts expect the yellow metal to continue to maintain its appeal as a safe haven. With the rise in political and economic tensions in the world, gold remains one of the preferred choices for investors.
The decline in gold prices in recent weeks was the result of a combination of several economic and political factors. Between the US President’s threats to increase tariffs on basic goods, and the dollar’s recovery from its lows, the yellow metal prices have declined.
