Gold drops early Friday as the dollar and equities rally on cooling trade tensions as China reportedly considers some tariff exemptions.
The yellow metal, which has hit a series of new record highs in recent weeks, was also subject to profit taking as investors turned to other assets. A stronger dollar is typically bearish for gold, making the dollar-denominated precious metal more affordable to holders of other currencies.
April consumer sentiment data comes out Friday and may provide investors with further direction.
June gold futures rose 1.7% Thursday to settle at $3,348.60 an ounce on Comex. The front-month contract rallied 0.6% in the first four days of the week. Bullion has increased 6.3% so far this month after gaining 11% in March and adding 0.5% in February. It’s up 29% so far this year. The metal rose 27% in 2024, its biggest annual gain since 2010. The June contract is currently down $69.90 (-2.09%) an ounce to $3278.70 and the DG spot price is $3283.90.
The yellow metal topped $3,500 an ounce earlier this week amid fears of a global economic slowdown, U.S. President Donald Trump’s tariffs and his threats to terminate Federal Reserve Chairman Jerome Powell. Gold remained elevated as a haven investment against geopolitical and economic uncertainty, central bank buying and signals that Fed policymakers may be open to cutting interest rates sooner than expected – a bullish move for gold.
Trump said Thursday that his administration was in talks with China – though Beijing denied it – and amid reports that the U.S. was close to deals or making significant progress in talks with South Korea and India.
Cleveland Fed President Beth Hammack told CNBC that the Fed could lower rates as early as June if economic conditions warrant – though she’s not a voting member of the policy-setting Federal Open Markets Committee this year. Fed Governor Christopher Waller told Bloomberg he’d support rate cuts if tariffs hurt the job market.
U.S. initial jobless claims for last week came in higher, but in line with forecasts, on Thursday.
Fed officials including Powell have said that the Trump tariffs are likely to raise inflation and unemployment. High interest rates were imposed during the pandemic to curtail inflation.
The Fed has been widely expected to continue interest rate cuts this year, most likely in the summer. Most investors tracked by the CME FedWatch Tool expect the Fed to begin interest rate cuts in June but keep them unchanged at the central bank policymakers’ next meeting in May. Lower interest rates are typically bullish for gold.
The Fed left rates unchanged at 4.25% to 4.50% at policymakers’ last meeting in March but reduced rates three times in 2024. The central bank began raising interest rates in March 2022 to fight inflation, ultimately imposing increases of by 5.25 percentage points before beginning rate cuts last year. Previously, the Fed had kept rates at 5.25% to 5.50% for a year.
Front-month silver futures slipped 0.1% Thursday to settle at $33.82 an ounce on Comex, though the July contract increased 3.2% in the first four days of the week. Silver is down 2.3% this month after advancing 9.9% in March and retreating 2.4% in February. It gained 21% in 2024. The July contract is currently down $0.744 (-2.20%) an ounce to $33.080 and the DG spot price is $32.95.
Spot palladium increased 1.8% Thursday to $959.00 an ounce and is down 0.8% so far this week. Palladium is down 3.8% this month after rising 7.3% in March and retreating 10% in February. Palladium dropped 17% last year. Currently, the DG spot price is down $20.10 an ounce to $942.50.
Spot platinum rose 0.4% Thursday to $982.20 an ounce, and it’s up 0.6% so far this week. Platinum is down 2.4% this month after increasing 6.7% in March and sliding 4.7% in February. Platinum lost 8.4% in 2024. The DG spot price is currently down $11.70 an ounce to $971.90.
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