Gold prices edged lower during Asian trading hours on Friday, extending their retreat from this week’s all-time highs. The decline comes as the U.S. dollar gained ground and traders recalibrated expectations around Federal Reserve policy, following the central bank’s decision to maintain its current interest rates.
Despite the slip, the yellow metal remains resilient, hovering above the psychologically significant $3,000 an ounce mark. Safe-haven demand continues to lend support amid rising concerns over the U.S. economy and President Donald Trump’s aggressive stance on trade, particularly the looming tariffs set to affect multiple sectors.
Gold Under Pressure as Dollar Regains Strength
Spot gold dipped 0.5% to $3,029.61 per ounce, while May gold futures fell 0.2% to $3,037.09 an ounce as of 00:57 ET (04:57 GMT). Earlier this week, spot prices soared to a historic $3,057.51/oz, driven by investor demand seeking shelter from economic volatility and geopolitical tensions.
The primary catalyst behind gold’s pullback appears to be the rebound in the U.S. dollar. The greenback erased recent losses incurred after Wednesday’s Federal Reserve meeting, gaining traction on renewed confidence that the Fed will hold interest rates steady for the foreseeable future. The dollar’s rally typically places downward pressure on commodities priced in the currency, making them more expensive for international buyers.
This resurgence in the dollar coincided with the Fed’s cautious tone regarding inflation and growth forecasts. The central bank left its benchmark interest rate unchanged but warned of persistent inflation risks and revised its 2025 growth forecast downward. Inflation expectations were also nudged higher, adding complexity to the Fed’s decision-making matrix.
Interestingly, traders brushed aside President Trump’s latest calls for rate cuts, signaling a broader market belief that the Fed will prioritize controlling inflation over political pressure.
Safe-Haven Demand Still Buoying Gold Above $3,000
Despite the headwinds from a strengthening dollar, gold remains well-supported above $3,000 due to its traditional role as a safe-haven asset. Heightened uncertainty surrounding Trump’s escalating trade war tactics, particularly with China, has investors flocking to the yellow metal.
Trump’s aggressive move to implement wide-ranging tariffs on imported goods — including metals such as copper — has created waves of uncertainty across global markets. The policy has reignited fears of retaliatory measures from key trading partners and raised questions about the long-term health of the U.S. and global economies.
For investors, this backdrop has reinforced gold’s allure as a hedge against both market volatility and potential stagflation risks, should tariffs and higher prices weigh on economic activity.
Broader Precious Metals Market Sees Red
Gold wasn’t the only metal feeling the heat. The broader precious metals market also weakened under the weight of a resurgent dollar.
- Platinum futures slipped 0.7% to $987.15 an ounce, pressured by diminished industrial demand and the general risk-off sentiment that accompanied the dollar’s advance.
- Silver futures fell 0.8% to $33.735 an ounce, despite silver’s dual role as both an industrial and safe-haven asset.
The moves reflect broader concerns that tighter financial conditions could weigh on manufacturing activity, curbing industrial demand for metals like silver and platinum.
Copper Retreats After Breaching $10,000; Market Eyes Trump Tariffs and China Supply Risks
Industrial metals also struggled on Friday, with copper prices pulling back from recent highs. Benchmark copper futures on the London Metal Exchange fell 0.2% to $9,910.30 a ton after breaking through the critical $10,000 level earlier in the week. May copper futures in New York eased 0.3% to $5.1020 a pound.
Copper’s earlier rally was driven by growing fears that Trump’s proposed 25% tariff on U.S. copper imports could severely limit domestic supply, fueling bullish sentiment across futures markets. However, as speculative momentum cooled and profit-taking emerged, copper prices moderated.
China’s Copper Smelter Shutdowns Amplify Supply Worries
In parallel, supply-side disruptions in China — the world’s largest copper consumer — are adding another layer of complexity to the red metal’s outlook.
Multiple Chinese smelters are reportedly curbing operations during a period that typically sees peak activity. The cutbacks stem from a tightening supply of copper concentrate, the key feedstock for refined copper production. Analysts expect this disruption to trigger shortages in finished copper products, which could sustain upward price pressure despite the recent pullback.
The combination of tariff threats from the U.S. and supply challenges from China has made copper a focal point for traders concerned about global supply chain stability. Analysts believe that should Trump’s tariffs come into effect, the ripple effects could be felt across industries, from electronics manufacturing to construction and renewable energy projects.
Fed’s Wait-and-See Approach Clouds Near-Term Outlook
The Federal Reserve’s stance is complicating the broader commodity outlook. By signaling no immediate intention to cut rates — despite Trump’s vocal criticism — the Fed has effectively tightened financial conditions relative to market expectations.
This hawkish pause comes as traders seek more clarity on how sticky inflation, softer growth projections, and the unfolding tariff saga will shape the macroeconomic landscape. Until there is a clear resolution, both precious and industrial metals markets are likely to remain highly sensitive to economic data releases and geopolitical developments.
Looking Ahead: Key Drivers to Watch
- U.S. Economic Data: Inflation prints, GDP growth rates, and consumer sentiment will continue to heavily influence gold and broader metals.
- Federal Reserve Policy: Any shift in tone or surprise dovish pivot could reignite bullish sentiment for gold and industrial metals.
- Geopolitical Tensions: The trajectory of U.S.-China relations, especially regarding tariffs, will be crucial for industrial metals like copper.
- Supply Chain Dynamics: Disruptions in China’s copper production and other regional supply chain bottlenecks could exacerbate price volatility.
Conclusion
Gold’s retreat from record highs underscores the balancing act between safe-haven demand and macroeconomic headwinds stemming from a stronger dollar and Fed policy. Meanwhile, copper’s recent pullback highlights the fragile equilibrium in industrial metals markets, where both supply shocks and geopolitical moves can drive sharp price swings.
As global financial markets continue to digest Trump’s latest protectionist measures and the Fed’s cautious stance, investors should brace for continued volatility across precious and industrial metals in the weeks ahead.
