Gold prices rose at the end of a volatile week, as investors turned their focus toward the favorable outcome of upcoming trade talks between the U.S. and China, the world’s two largest economies.
After recording a weekly gain of about 3%, bullion closed the week at $3,326.15 per ounce. In the UAE, the price of 24K gold per gram exceeded Dh400, while 22K gold was priced at Dh371.25.
Optimism in U.S.-China Trade Talks
On Sunday, the U.S. announced significant progress in trade negotiations with China, with a statement from the White House highlighting the progress made. Secretary of the Treasury, Scott Bessent, confirmed that there was “substantial progress” between the parties.
Ahead of the talks, U.S. President Donald Trump had threatened an 80% tariff on Chinese goods but softened his stance after the first day of talks in Geneva. Trump referred to the discussions as a “total reset” and noted that they had been conducted in a “friendly, but constructive, manner.” Chinese state media echoed this sentiment, suggesting the meeting marked a positive step toward resolving tensions.
The U.S. side is reportedly aiming to reduce tariffs to below 60% in the first phase of the deal, which China may agree to. If progress continues, these tariff reductions could take effect as soon as next week.
What a Trade Deal Could Mean for Gold Prices
The U.S.-China trade conflict has been a significant factor behind gold’s 27% price increase this year, with gold prices reaching nearly $3,500 an ounce last month. A resolution to the trade dispute could potentially reduce gold’s appeal as a safe-haven asset, leading to lower demand. Additionally, a strengthening U.S. dollar—fueled by a cautious approach from Federal Reserve Chairman Jerome Powell on future rate cuts—could put further downward pressure on gold prices.
A stronger dollar, to which the UAE dirham is pegged, makes gold more expensive for foreign buyers. If trade tensions ease and the U.S. dollar maintains its strength, gold prices may face a decline in the short term.
As traders closely monitor the situation, the future of gold remains uncertain, with many questioning whether prices will cool off once a trade deal is reached.
