Gold prices fell sharply during trading on Thursday as part of a broad sell-off that affected most global markets, after the dollar rose to its highest level in nearly two weeks, and as signs emerged of easing trade tensions between the United States and China, which increased pressure on precious metals.
The price of gold in spot trading fell by 2.5% to $4,838.81 an ounce, retreating from its highest level in nearly a week, which it had reached earlier in the session.
Gold futures in the United States for April delivery also fell by 1.9% to $4,855.60 an ounce.
The dollar and continued volatility are changing investor appetite.
Tim Waterer, senior trading analyst at KCM, said that Kevin Warsh's nomination to head the Federal Reserve gave the dollar a new boost, enabling the US currency to continue its advance, noting that traders have become more cautious towards gold in light of the sharp and unusual fluctuations the metal has witnessed recently.
The US dollar index rose to a level close to its highest point in two weeks, making dollar-denominated gold more expensive for holders of other currencies.
Christopher Wong, a strategist at OCBC Bank, said sentiment had deteriorated across most asset classes, including precious metals, cryptocurrencies and stocks in a number of regional markets, noting that losses were feeding off each other, creating a cycle of mutual pressure amid weak market liquidity.
Asian stocks and political calm weigh on metals
Asian stocks fell, following their US counterparts, as concerns about the rising costs of investing in artificial intelligence technologies continued to weigh heavily on the technology sector.
On the geopolitical front, the United States and Iran announced they had agreed to hold talks in Oman on Friday, according to officials from both sides. Meanwhile, US President Donald Trump said China was considering buying additional US-produced soybeans, following what he described as very positive talks with his Chinese counterpart Xi Jinping on Wednesday.
Kunal Shah, head of research at Nirmal Bang Commodities in Mumbai, said that the easing of geopolitical tensions, along with the temporary waning of talk about a move to decouple from the dollar, leaves metals with very limited room to continue rising at the present stage.
Platinum and palladium collapse after historic highs
In the rest of the precious metals markets, platinum fell 8.7% to $2,033.35 an ounce in spot trading, after hitting a record high of $2,918.80 on January 26, while palladium declined 5.8% to $1,672.00 an ounce.
