Gold Prices Drop Following U.S.-UK Trade Deal Announcements
Gold prices fell on Friday after U.S. President Donald Trump announced a trade deal with the UK, reducing bullion’s safe-haven appeal. Market attention is now focused on the upcoming U.S.-China trade talks this weekend.
As of 0217 GMT, spot gold decreased by 0.8% to $3,277.67 an ounce, while U.S. gold futures lost 0.7% to $3,282.80.
Details of the U.S.-UK Trade Deal
Trump and British Prime Minister Keir Starmer announced a “breakthrough deal.” Key points from the agreement include:
- A 10% tariff on goods imported from the UK remains in place.
- Britain has agreed to lower its tariffs from 5.1% to 1.8%.
- The deal provides greater access for U.S. goods to the UK market.
Kyle Rodda, a financial market analyst at Capital.com, noted: “I think the progress in trade talks and the U.S.-UK deal is the main reason we’ve got gold off the highs.”
He added that “high-level talks over the weekend between the U.S. and China are also driving flows away from gold.”
Expectations for U.S.-China Trade Talks
President Trump expressed optimism about substantive negotiations with China, suggesting that the current punitive tariffs of 145% on Beijing may be reduced.
The Economic Context for Gold
Gold is traditionally viewed as a hedge against economic and political uncertainties, especially in low interest rate environments. However, with expectations of potential trade resolutions, its safe-haven appeal may be waning.
Later in the day, several U.S. Federal Reserve officials are scheduled to speak, offering potential insights into the economy and the Fed’s policy direction. This follows the decision to hold interest rates steady and the warning of rising inflation and unemployment risks.
Additionally, inflow into physically backed gold exchange-traded funds in April was the largest since March 2022, driven by demand in China due to the ongoing trade conflict with the U.S., according to data from the World Gold Council.
Other Precious Metals Performance
As for other precious metals:
- Spot silver fell by 0.7% to $32.27 an ounce.
- Platinum rose by 0.2% to $977.85.
- Palladium fell by 0.4% to $971.86.
