Gold prices saw an uptick on Friday following a significant drop earlier after U.S. President Donald Trump’s announcement of a trade deal with the U.K. As market attention shifts toward the upcoming U.S.-China talks this weekend, analysts predict these discussions will divert investment away from gold, limiting further price gains.
In Dubai, gold rates recorded notable declines, with 24-carat gold dropping AED11.75 to AED397.25, while 22-carat gold fell AED10.75 to AED367.75. Additionally, 21-carat gold decreased AED10.25 to AED352.75, and 18-carat gold slid AED9 to AED302.25.
On Thursday, gold prices were just AED3.5 shy of their all-time high before experiencing a significant dip as trade tensions between the U.K. and U.S. eased. As the market awaits the outcomes of the U.S.-China trade talks, analysts expect gold prices to remain volatile in the short term. Should negotiations indicate a positive development toward a trade deal between the world’s two largest economies, gold prices may fall further, providing an opportunity for investors to buy at lower prices.
Global Gold Price Movements
Globally, spot gold rose 0.18% to $3,309.89 as of 4:05 GMT, while U.S. gold futures increased 0.23% to $3,313.56. Over the past week, bullion has gained more than 2%.
U.S.-U.K. Trade Deal Drives Gold Dip
Gold prices retreated after Trump and British Prime Minister Keir Starmer announced a “breakthrough deal” on Thursday. Although a 10% tariff on U.K. imports remains, Britain agreed to reduce its tariffs to 1.8% from 5.1%, opening more access to U.S. goods.
Despite a modest recovery in early trading, analysts expect high-level U.S.-China talks over the weekend to steer investment away from gold, limiting potential gains.
Trump mentioned that he anticipates “substantive negotiations” between the U.S. and China and suggested that punitive U.S. tariffs on China, which currently stand at 145%, could be reduced.
Market Awaits Fed Comments
With several U.S. Federal Reserve officials scheduled to speak later today, markets are looking for further insights into the economy and the Fed’s policy direction. This follows the Fed’s decision on Wednesday to hold interest rates steady between 4.25% and 4.50% amid rising inflation and unemployment risks.
Vijay Valecha, chief investment officer at Century Financial, noted, “The U.S. economy remains on solid footing, as shown by persistent strength in hard economic data, particularly labor market reports.”
Gold typically performs well in a low-interest-rate environment, as the metal is considered a hedge against economic and political uncertainties.
Gold ETF Inflows Surge in April
In a positive sign for gold, inflows into physically backed gold exchange-traded funds (ETFs) surged in April, marking the largest increase since March 2022. According to data from the World Gold Council, China-listed funds were a key driver of this surge due to ongoing trade tensions with the U.S.
Gold ETFs saw an inflow of 115.3 metric tons worth $11.2 billion last month, the highest since March 2022, raising total holdings by 3.3% to 3,560.8 tons by the end of April. This marks the largest amount since August 2022, though still short of the record of 3,915 tons in October 2020.
