Gold prices saw a sharp decline in global markets on Friday, with the precious metal losing more than $130 per ounce, falling below $4,200, amid a clear shift in risk appetite following US President Donald Trump's remarks.
Gold prices fell nearly 3% to trade at $4,196 per ounce, after hitting record highs in the previous session. This decline is attributed to a decline in safe-haven demand after Trump stated that 100% tariffs on Chinese imports will not be sustainable in the long term, raising hopes for a de-escalation in trade tensions between Washington and Beijing.
Markets reacted quickly to these statements, with traders engaging in profit-taking after the strong rise in gold prices in recent weeks. Economists point out that any easing of trade tensions or signs of a near-term settlement would reduce demand for gold as a safe haven, which explains the current sharp decline in gold prices.
Meanwhile, positive expectations regarding the end of the US government shutdown supported the US dollar, increasing pressure on gold prices. White House economic advisor Kevin Hassett predicted that the Trump administration would take urgent steps to end the shutdown before next week, boosting market optimism and prompting investors to move away from safe-haven assets.
The dollar index also rose by approximately 0.10% to trade at 98.43, which negatively impacted gold trading.
The downward trend extended to other precious metals, with silver falling more than 6% to around $49 per ounce, while palladium fell 9% to around $1,514 per ounce, and platinum fell about 7% to $1,622 per ounce.
Analysts believe that the current decline in gold prices may be a temporary correction after recent record highs, with geopolitical and economic factors capable of re-supporting prices at any moment if market concerns return.
