Gold prices fell on Thursday after hitting an all-time high of $3,357.77, as traders took profits ahead of the weekend. The decline follows a sharp rise of 3.6% on Wednesday, driven by renewed concerns about U.S. tariff policy and inflation risks. While the overall trend remains bullish, price action suggests that the market is likely to rise excessively in the near term.
The gold/USD pair is trading at USD$3,329.68, down USD 13.42 or -0.40%.
The decline was largely technical, with some position adjustments and slight profit-taking following the recent rally. Ross Norman, an independent analyst, noted that this decline was likely driven by traders profiting from price hikes, noting that “price declines are well received, suggesting that the underlying sentiment is very positive.” However, Thursday’s close to the low indicates that sellers briefly outperformed buyers at high levels.
Uncertainty over tariffs and the Fed’s hesitation fuel volatility. President Trump’s push for broader tariffs on imports of base metals, along with investigations into the pharmaceutical and semiconductor sectors, has exacerbated uncertainty over inflation expectations. Federal Reserve Chairman Jerome Powell acknowledged on Wednesday the inflationary risks of these policies, but stressed the need for more data before taking any policy move. Powell warned that the Fed could face conflicting goals: controlling inflation and supporting slowing growth.
U.S. Treasury yields rose on Thursday, with ten-year yields at 4.319% and two-year yields at 3.815%, reflecting inflation concerns.
At the same time, the US dollar rose slightly, supported by a weaker euro and a stable trade dialogue with Japan. A stronger dollar generally puts pressure on gold, making it more expensive for foreign buyers.
Gold corrects as US trade tensions calm
Gold (XAU/USD) revised slightly to near $3,312 in the European session on Thursday, after hitting an all-time high of $3,358 earlier in the day. The precious metal faces profit-taking as tangible progress in trade negotiations between the United States and Japan eased concerns about potential global economic turmoil.
US President Donald Trump wrote in a post on the TruthSocial platform on Wednesday: “I was honored to meet the Japanese delegation on trade. Great progress!”
The positive development in trade talks between Washington and Tokyo suggests that US President Trump has used the tariff tool to gain a dominant position while negotiating bilateral deals with his trading partners. This has led to a slight decline in global market uncertainty.
However, investors should refrain from investing in short positions on the price of gold, as the escalation of the US-China trade war is enough to keep risk appetite under control. Precious metals tend to perform better amid rising global economic tensions.
The conflict between the United States and China has become more a struggle for dignity than a struggle over the scope of tariffs. The United States wants China to start trade talks first, signaling that it needs our money. Meanwhile, China is willing to sit at the negotiating table, but with respect and mutual interest. On Tuesday, White House press secretary Caroline Levitt said the president wants China to initiate trade talks. “The ball is in China’s court: China needs to make a deal with us, we don’t have to make a deal with them”.
Physical demand for gold fell in India and China, as rising prices deterred traditional buyers. While insurance premiums in China remained stable, this rise appears to be driven more by macroeconomic concerns and speculative flows than actual market support.
Slight correction in XAU with limited recovery of US dollar
The price of gold fell from an all-time high of $3,358 on Thursday. This slight correction in the price of the precious metal is also attributed to a nominal recovery in the US dollar (USD). The US Dollar Index (DXY), which tracks the value of the greenback against six major currencies, is attracting buy orders near a three-year low of 99.00, and is moving up to nearly 99.50, at the time of writing. Trump’s preference for trade talks over exorbitant-for-tat tariffs has eased uncertainty around the world, evidenced by a slight recovery in the US dollar. Technically, the rise in the US dollar makes investment In gold is expensive for investors.
The US dollar index has faced a fierce sell-off in the past few months, as market experts have become very pessimistic about US economic growth under Trump’s tariff policies. Market participants expected higher tariffs on all imports into the U.S. to increase inflation and impact economic growth.
In addition, a slight hawkish comment from Federal Reserve Chairman Jerome Powell at the Chicago Economic Club on Wednesday provided some relief to the US dollar. Powell noted that the U.S. economy remains strong even though Trump’s economic policies have curbed economic risks. “The U.S. economy is robust despite growing uncertainty and downside risks,” Powell said. He expressed confidence that the economy was still in a position to wait for further clarity, giving them confidence to avoid any adjustments in monetary policy.
The price of gold fell slightly from historical highs of USD$3,358 on Thursday. However, the overall outlook for the price of gold remains positive, with all short- and long-term exponential moving averages (EMAs) trending upwards.
