Gold Prices Retreat as Trade Tensions Ease and US Dollar Strengthens
Gold prices, which had recently surged to record highs amid escalating trade tensions, are now experiencing a decline. As of April 28, 2025, the price of 10 grams of gold on the Multi Commodity Exchange (MCX) for June 5 contracts has decreased by 0.18%, trading at ₹94,818.
Factors Influencing the Decline
1. Easing US-China Trade Tensions
Recent developments suggest a de-escalation in the trade conflict between the United States and China. U.S. Treasury Secretary Scott Bessent has indicated optimism about a potential “big deal” with China to ease trade tensions, proposing reduced tariffs and shifts in economic models from both nations. These comments have boosted investor confidence, leading to a rally in global markets and a decrease in demand for safe-haven assets like gold.
2. Strengthening US Dollar
The US Dollar Index has risen by approximately 0.3%, making gold more expensive for holders of other currencies. A stronger dollar typically dampens the appeal of gold, as it becomes more costly for international buyers.
3. Reduced Safe-Haven Demand
As geopolitical uncertainties ease and market sentiment improves, the demand for gold as a safe-haven asset diminishes. This shift is reflected in the recent decline in gold prices.
Market Outlook
Despite the recent decline, analysts suggest that the long-term outlook for gold remains positive due to ongoing global uncertainties and inflation concerns. Investors are advised to monitor upcoming economic data, including job openings and non-farm payroll reports, which may influence Federal Reserve policy and impact gold prices.
In summary, the recent pullback in gold prices is attributed to easing trade tensions, a strengthening US dollar, and reduced demand for safe-haven assets. However, the fundamental factors supporting gold’s long-term value continue to persist.
