Spot gold rose 0.4 per cent to $5,192.28 per ounce by 0500 GMT, extending gains after touching a more than three-week high earlier in the week. US gold futures for April delivery slipped 0.3 per cent to $5,208.80, reflecting some consolidation after a strong run that has kept bullion near record territory.
The move came as the US dollar index eased against a basket of major currencies, making dollar-denominated gold cheaper for overseas buyers. Currency traders have been recalibrating positions amid shifting expectations around US trade policy, particularly as policymakers debate the scope and timing of tariffs targeting key trading partners. Any escalation in trade tensions is widely seen as supportive of bullion, which is traditionally viewed as a hedge against geopolitical and economic instability.
Market participants are also watching indirect talks involving Washington and Tehran over regional security and sanctions. While there has been no formal breakthrough, diplomatic manoeuvring has added to a backdrop of uncertainty across energy markets and broader risk assets. Analysts note that even tentative developments in US-Iran engagement can ripple through commodities, influencing oil prices and, by extension, inflation expectations—an important driver for gold.
Bullion’s performance this year has been underpinned by a combination of factors: persistent central bank buying, expectations of looser monetary policy in major economies and robust retail demand in Asia and the Middle East. Data from the World Gold Council have shown that official sector purchases remain historically elevated, with several emerging market central banks adding to reserves as part of diversification strategies away from the dollar.
At the same time, investors have been parsing economic indicators for clues on the Federal Reserve’s next steps. Inflation in the United States has cooled from its peak but remains above the central bank’s long-term target, complicating the outlook for interest rates. Gold, which yields no interest, tends to benefit when real yields fall or when markets anticipate rate cuts that reduce the opportunity cost of holding non-yielding assets.
Treasury yields have traded in a narrow range this week, reflecting caution ahead of further economic data releases and speeches by Federal Reserve officials. Any indication that policymakers are leaning towards easing could provide additional tailwinds for bullion. Conversely, stronger-than-expected growth or inflation readings could weigh on prices by bolstering the case for keeping rates higher for longer.
Physical demand dynamics are also in focus. Dealers in major consuming markets such as China and India have reported fluctuating premiums and discounts depending on local currency movements and seasonal buying patterns. Elevated domestic prices in some markets have tempered jewellery demand, though investment demand via bars and coins has remained resilient.
Exchange-traded funds backed by physical gold have seen intermittent inflows after a period of outflows last year, suggesting that institutional investors are cautiously rebuilding exposure. Holdings remain below peaks seen during earlier bouts of global uncertainty, leaving room for further positioning should geopolitical risks intensify.
Silver, platinum and palladium have tracked gold’s direction to varying degrees. Silver has drawn support from its dual role as both a precious and industrial metal, while platinum group metals remain sensitive to developments in the automotive sector and emissions regulations.
The divergence between spot prices and US futures on Thursday pointed to some profit-taking in derivatives markets after bullion’s climb to multi-week highs. Traders said short-term technical indicators show gold approaching overbought territory, which could prompt bouts of volatility even if the broader trend remains intact.
Geopolitical considerations continue to influence sentiment. Trade policy debates in Washington have revived concerns about supply chains and global growth, particularly if tariffs are broadened or extended. Meanwhile, the trajectory of US-Iran contacts is being scrutinised for implications not only for oil flows but also for broader regional stability.
Portfolio managers argue that gold’s appeal at elevated levels reflects more than episodic headlines. Structural shifts, including central banks’ efforts to diversify reserves and heightened awareness of geopolitical fragmentation, have altered the metal’s role within asset allocation strategies. Some asset managers have raised their strategic weighting to gold, citing its performance during periods of equity market stress and currency volatility.
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