Gold Prices Dip as Fed’s Cautious Outlook and U.S.-China Trade Progress Pressure Safe-Haven Demand

Gold prices slipped in Asian trading on Friday, heading for their second straight weekly decline as the Federal Reserve’s cautious stance on interest rate cuts and improving U.S.-China trade relations reduced demand for the precious metal.

Spot gold dropped 0.4% to $4,008.65 per ounce by 01:49 ET (05:49 GMT), while U.S. gold futures edged up 0.1% to $4,019.90. Despite Thursday’s sharp 2% rebound, the metal was still on track for a 2.6% weekly loss. The downturn follows the Fed’s recent 25-basis-point rate cut to a range of 3.75%-4.00%. However, Fed Chair Jerome Powell’s remarks suggesting uncertainty over further rate cuts boosted the U.S. dollar and Treasury yields, diminishing gold’s appeal as a non-yielding asset.

Investor sentiment also improved after U.S. President Donald Trump and Chinese President Xi Jinping signaled progress in trade talks. The two leaders met in South Korea, agreeing to reduce a 10% tariff on fentanyl-related imports while China resumed soybean purchases from the U.S. and halted new rare-earth export restrictions. This easing of trade tensions weakened gold’s safe-haven allure as markets shifted toward riskier assets on hopes of an impending deal.

Still, analysts believe gold could find medium-term support from central bank buying and ongoing global economic uncertainties. Despite short-term headwinds, the precious metal remains a key hedge amid fluctuating interest rate expectations and geopolitical risks.

In broader metals trading, silver futures fell 0.3% to $48.48 per ounce, while platinum gained 0.4% to $1,617.45. Copper prices slipped, with London Metal Exchange futures down 0.4% to $10,866.20 a ton. Weak Chinese manufacturing data—showing contraction for a seventh straight month—reinforced concerns about sluggish recovery, sparking speculation of potential economic stimulus from Beijing.