Introduction

Gold prices experienced a sharp decline on Friday, dropping 2% intraday to $3,281.76 per ounce for spot gold and 1.6% to $3,293.50 per ounce for US gold futures. This marks the third decline in four days, driven by emerging signs of easing global trade tensions, particularly between the US and China.

Key Factors Behind the Decline

The drop in gold prices coincides with reports of potential de-escalation in trade disputes, including hints from US President Donald Trump about upcoming trade deals. Yuxuan Tang, a strategist at JPMorgan Private Bank, noted that headlines regarding partial exemptions in retaliatory tariffs have further boosted market sentiment, pushing gold below the $3,300 threshold. Despite this, gold remains on track for a 1% weekly loss, even after hitting a record high above $3,500 earlier in the week.

Market Resilience and Long-Term Outlook

Analysts suggest that gold’s dips are often short-lived, as investors tend to buy back during price declines. TD Securities commodity strategist Daniel Ghali highlighted that while the apparent détente on tariffs is negatively impacting prices, there have been no significant liquidations. He remains confident that gold could resume its upward trajectory, supported by consistent buying during recent dips. Additionally, JPMorgan analysts project gold prices to average $3,675 per ounce in 2025, with a potential peak of $4,000 by the second quarter of 2026.

Critical Perspective

While the current decline reflects a natural market response to reduced geopolitical uncertainty, it raises questions about gold’s role as a safe-haven asset in a rapidly shifting economic landscape. If trade tensions continue to ease, could gold lose its appeal to investors seeking risk-averse options? On the other hand, the metal’s 25% gain year-to-date underscores its resilience and attractiveness amid broader market volatility. The balance between short-term fluctuations and long-term bullish forecasts warrants close monitoring.