By Anmol Choubey
(Reuters) – Gold fell nearly 2% to a two-week low on Thursday as signs of easing trade tensions boosted risk appetite and reduced bullion’s safe-haven appeal, while a stronger U.S. dollar also weighed on prices.
Spot gold was down almost 2% to $3,222.66 an ounce at 1129 GMT, after hitting its lowest since April 15.
U.S. gold futures were down 2.7% to $3,230.80.
The dollar index rose 0.3%, making dollar-denominated gold more expensive for buyers holding other currencies. [USD/]
“There is ongoing hope that some trade deals are signed soon, allowing lower tariffs to stay,” said UBS analyst Giovanni Staunovo, adding that this optimism, combined with a stronger dollar, was exerting pressure on gold.
U.S. President Donald Trump said on Wednesday that trade deals were possible with India, Japan and South Korea. He also said there was a “very good chance” of a deal with China.
The U.S. has approached China to seek talks over Trump’s 145% tariffs, a social media account affiliated with Chinese state media said.
The U.S. economy contracted for the first time in three years in the first quarter, weakened by a surge of imports as businesses sought to pre-empt the imposition of higher tariffs.
However, Federal Reserve policymakers indicated that short-term interest rates would remain unchanged until there were clear signs of inflation nearing the central bank’s 2% goal or potential job market deterioration.
Investors await Friday’s nonfarm payrolls report for further insight into the Fed’s policy direction.
“A weaker payroll report should support calls for more rate cuts by the Fed this year and allow gold to move back to $3,500/oz over the coming months,” said UBS’ Staunovo.
Analysts in a quarterly Reuters poll forecast an average annual gold price above $3,000 for the first time.
Gold, a non-yielding metal considered a hedge against political and financial turmoil, briefly hit $3,500 last week.
Spot silver fell 1.8% to $31.99 an ounce, platinum dropped about 1% to $956.63 and palladium was up 0.3% to $941.10.
(Reporting by Anmol Choubey in Bengaluru. Additional reporting by Sarah Qureshi. Editing by Mark Potter)
