Gold extended a decline as the dollar ticked up and President Donald Trump teased plans to unveil a “major” trade deal Thursday, boosting optimism that negotiations to soften some of the US’ sweeping tariffs are making headway.
Bullion traded near $3 340 an ounce, after losing 2% in the previous session. A gauge of the greenback rose 0.3%. The US announcement on Thursday is expected to involve an agreement with the UK, according to people familiar with the matter.
The unfolding trade war has helped fuel a 27% rally in the precious metal this year as investors seek safe havens from widespread market chaos. That panic has now somewhat eased, with US equities back at roughly their valuations prior to the announcement of the tariffs on April 2. Bullion’s ascent has also been driven by speculative demand in China and central-bank purchases.
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On Wednesday, gold fell after the Federal Reserve held interest rates and Chair Jerome Powell said the central bank isn’t in a rush to cut despite trade-war uncertainty.
Powell warned that Trump’s tariff agenda raises the risk of both higher inflation and slowing growth, but added the Fed could afford to keep policy on hold until officials have a better understanding of where the economy is headed.
“The effects on inflation could be short-lived, reflecting a one time shift in the price level,” he said. But it’s “also possible that the inflationary effects could instead be more persistent.” Any trade certainty would have to come from the White House, Powell said.
The dollar pushed higher after the Fed chief’s comments, making bullion more expensive for most buyers. The possibility of fewer rate cuts is also negative for gold as it doesn’t offer interest, so becomes relatively more attractive in a lower-rate environment. Traders are still betting on at least three interest-rate cuts in the rest of 2025, with most of the market viewing a reduction as likely in July.
Spot gold fell 0.7% to $3 340.02 an ounce as of 10:51 a.m. in London. The Bloomberg Dollar Spot Index edged higher after gaining 0.5% on Wednesday. Silver was little changed, while palladium fell.
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