Gold slips early Friday, heads for its worst week since November, after trade tensions between the U.S. and China lessened, sending haven investors into other assets.
The U.S. dollar also strengthened, dinging the yellow metal’s attractiveness, particularly for holders of other currencies, since gold is dollar denominated.
June gold futures rose 1.2% Thursday to settle at $3,226.60 an ounce on Comex, though the front-month contract fell 3.5% in the first four days of the week. Bullion increased 5.4% in April after gaining 11% in March and adding 0.5% in February. It’s up 22% so far this year. The metal rose 27% in 2024, its biggest annual gain since 2010. The June contract is currently down $46.00 (-1.43%) an ounce to $3180.60 and the DG spot price is $3182.60.
The U.S. and China – the world’s two largest economies – agreed this week to lift some of the more stringent tariffs on good exchanged by the wo countries. The deal sent the broader market higher, but pressured gold prices.
Also affecting the yellow metal were two key inflation reports this week. The latest, the producer price index, which came out Thursday with April data, showed an unexpected decline, a possible signal that the economy remains robust.
Federal Reserve Governor Michael Barr said Thursday that the U.S. economy is on solid footing. That further reduced the need for haven investors seeking protection against economic and geopolitical uncertainty.
U.S. wholesale prices dropped by 0.5% last month, the most in five years, suggesting that companies are absorbing some of the hit from tariffs rather than passing prices on to consumers. Excluding volatile food and energy prices, core PPI fell 0.4%, the most since 2015, according to data from the Bureau of Labor Statistics.
Separately, in data released earlier this week, the U.S. consumer price index, a key inflation measure, rose just 2.3% on an annual basis, its lowest level since February 2021. So-called core CPI, which excludes volatile food and energy prices, increased 0.2% month on month and 2.8% year on year. The forecasts for core CPI were 0.3% and 2.8% respectively.
Investors closely watch both inflation for indications on the state of the economy and the likelihood of the Fed’s next moves on monetary policy.
The central bank last week left interest rates unchanged again at 4.25% to 4.50% last week.
Most investors tracked by the CME FedWatch Tool now expect the Fed to begin interest rate cuts in September, not the next two scheduled policy meetings in June and July. Lower interest rates are typically bullish for gold, making the yellow metal a more attractive alternate investment.
The Fed held rates at policymakers’ meetings this year after reducing them 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 gained 0.7% Thursday to settle at $32.68 an ounce on Comex, though the July contract decreased 0.7% in the first four days of the week. Silver dropped 5.2% last month after advancing 9.9% in March and retreating 2.4% in February. It gained 21% in 2024. The July contract is currently down $0.450 (-1.38%) an ounce to $32.230 and the DG spot price is $32.19.
Spot palladium climbed 1.8% Thursday $977.50 an ounce, but was down 1% in the first four days of the week. Palladium fell 4.9% last month after rising 7.3% in March and retreating 10% in February. Palladium dropped 17% last year. The current DG spot price is down $2.50 an ounce to $969.50.
Spot platinum advanced 1.2% Thursday to $1,000.40 an ounce but fell 0.9% in the first four days of the week. Platinum retreated 3.1% in April 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 $10.60 an ounce to $988.70.
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