Gold prices remained flat in early trade on Friday, but were on course to post a weekly loss as a stronger dollar continued to weigh on investor sentiment, offsetting any support from renewed trade tensions linked to fresh US tariffs.
As of 4:24 AM GMT, spot gold was trading at $3,292.18 per ounce, unchanged from the previous session. So far this week, the precious metal has slipped by 1.3 percent. Meanwhile, US gold futures were down 0.2 percent at $3,342.10.
The dollar index reached its highest level since May 29, making gold more expensive for buyers holding other currencies. The rising dollar is being supported by the US Federal Reserve’s firm stance on keeping interest rates elevated for now.
“Gold has been stuck between $3,250 and $3,450 for nearly two months, but it looks like it’s drifting towards the lower end of that range and may even break below it,” said Edward Meir, an analyst at Marex. He attributed the downward pressure on gold to the dollar’s momentum, which is being driven by the Fed’s cautious tone.
The Federal Reserve kept interest rates unchanged in the 4.25 to 4.50 percent range on Wednesday and gave little indication of a rate cut in September. Since gold is a non-yielding asset, it tends to lose appeal when interest rates remain high.
Adding to the uncertainty, President Donald Trump on Thursday signed an executive order imposing “reciprocal” tariffs between 10 and 41 percent on imports from multiple countries, just ahead of a key trade deadline on Friday. Duties on Canadian goods not covered under the US-Mexico-Canada agreement were raised to 35 percent from 25 percent, while Mexico was given a 90-day window to strike a new deal.
“If these countries fail to negotiate lower tariff rates, we might see renewed upward pressure on prices as trade tensions heat up,” Meir added.
At the same time, inflation in the US rose in June, with tariffs contributing to higher import costs. Investors are now closely watching the upcoming US jobs report for further clues on the Fed’s monetary policy direction.
Elsewhere in the metals market, spot silver dipped 0.3 percent to $36.63 per ounce, platinum was steady at $1,288.70, and palladium gained 0.4 percent to $1,195.91. All three metals were also heading for weekly declines.
