Gold prices rose Friday and were on track for a weekly gain of 2.5% as investors responded to a weakening U.S. dollar and escalating geopolitical tensions, with attention turning to U.S.-China trade talks set for this weekend in Switzerland. Spot gold climbed 0.6% to $3,325.20 per ounce by 11:34 GMT, while U.S. gold futures increased 0.8% to $3,334.30.
The dollar index fell 0.3%, increasing the appeal of gold to holders of other currencies. "The exaggerated moves [in gold] suggest there is strong buying on the one hand on economic uncertainty, while strong selling is in evidence as some see the higher prices as an opportunity to take profit," said Ross Norman, an independent analyst.
Market participants are closely watching the upcoming trade negotiations between Treasury Secretary Scott Bessent, U.S. Trade Representative Jamieson Greer, and Chinese officials in Geneva. The talks follow President Donald Trump's comments suggesting a potential cut to China tariffs from the current 145% to 80%, aimed at de-escalating the prolonged trade war between the two nations.
"Markets are particularly focused on a possible U.S.-China trade deal," Norman added. "Equally, minds are also concerned about the India/Pakistan crisis." On Thursday night and early Friday, Pakistan launched multiple drone and artillery strikes along India's western border, according to Indian military officials.
Gold hit an all-time high of $3,500.05 per ounce last month, fueled by robust central bank purchases and investor demand amid global instability. In the current session, gold recovered from an intraday low of $3,274.38 before testing the $3,350 resistance level. Analysts say a sustained move above this level could trigger another leg up.
"We're seeing a classic consolidation pattern," said Rajeev Mehta, senior commodities analyst. "If gold sustains above $3,350, we could look at a new leg up, but any sustained weakness below $3,300 could lead to broader market selloffs."
The Federal Reserve's monetary stance remains another key factor. Fed Governor Michael Barr said Friday that policymakers should remain patient in assessing the economic impact of tariffs before making any decisions on interest rates. Lower expectations for aggressive rate hikes have supported gold's ascent as investors hedge against inflation.
Silver dipped 0.2% to $32.44 per ounce, while platinum rose 0.6% to $981.94 and palladium gained 0.4% to $980.15. Gold's outperformance relative to other precious metals has driven the gold-to-silver ratio to near 100:1, as demand continues to be led by safe-haven flows rather than industrial use.
Central banks in emerging markets, including India and Turkey, have reportedly increased gold reserves in recent months to diversify away from the U.S. dollar, lending further support to prices.
