Gold prices reversed earlier gains on Thursday, as market sentiment shifted following hints of a potential trade deal between the U.S. and the UK. Spot gold fell by 0.7%, reaching $3,339.32 per ounce as of 0858 GMT, after rising more than 1% earlier in the session. U.S. gold futures also declined by 1.4%, trading at $3,345.
Nitesh Shah, commodities strategist at WisdomTree, suggested that expectations of a trade deal between the U.S. and Britain could help stabilize the U.S. dollar, diminishing gold’s appeal as a safe-haven investment. “As it becomes confirmed that there is some sort of trade deal in the wings, it could help to firm up the dollar a bit and take some of the steam off of gold,” Shah stated.
On Thursday, both the U.S. and Britain were expected to announce a deal aimed at reducing tariffs on certain goods. President Donald Trump confirmed on Truth Social that he would hold a press conference regarding a “major trade deal,” while British Prime Minister Keir Starmer is also expected to provide an update on U.S.-UK trade discussions.
Additionally, trade talks between the U.S. and China in Switzerland, scheduled for this weekend, are adding to investor uncertainty. Trump reiterated his stance that China initiated the discussions, emphasizing his unwillingness to reduce import tariffs on Chinese goods as part of the negotiations.
Meanwhile, the U.S. Federal Reserve held interest rates steady at 4.25% to 4.50% on Wednesday, but issued a cautionary warning about rising risks of inflation and unemployment, exacerbated by President Trump’s tariff policies.
Gold, traditionally viewed as a hedge against political and economic uncertainties, thrives in a low-interest-rate environment. In another development, sources revealed that China’s central bank has approved foreign exchange purchases by commercial banks to fund increased gold imports, following recent changes to import quotas.
Geopolitical tensions also contributed to the gold price movement. Pakistan’s military reported shooting down 12 drones from India that violated its airspace, following Indian missile strikes on multiple targets in Pakistan. Ole Hansen, head of commodity strategy at Saxo Bank, remarked, “Rising tensions between India and Pakistan will continue to attract attention, potentially leading to an unquantifiable level of safe haven demand.”
In other precious metals, spot silver fell by 0.4% to $32.34 per ounce, while platinum edged up by 0.1% to $975.08. Palladium saw a significant drop, falling 1.5% to $957.50.
