Gold prices steadied close to the $4,000 per ounce mark on Friday, as investors digested a tentative trade ceasefire between the United States and China that did little to dispel underlying concerns about protracted rivalry between the world’s top two economies.
Spot gold pared earlier losses after slipping as much as 0.8% during Asian trading hours. Chinese President Xi Jinping, speaking publicly for the first time following talks with U.S. President Donald Trump, emphasized the need for stable global supply chains.
While the meeting between the two leaders appeared to temporarily halt months of tense negotiations, analysts suggested the one-year truce may only provide a brief window for both countries to lessen their mutual reliance. The fragile détente highlighted China’s growing economic influence during Trump’s second term, a key factor sustaining interest in traditional haven assets such as gold.
Bullion is poised for its second consecutive weekly loss, down about 8% from a record high of above $4,380 set on October 20. The recent slide has been intensified by fading expectations for additional Federal Reserve rate cuts, after Chair Jerome Powell suggested this week that hopes for a December move should be tempered following a recent quarter-point reduction.
A further drag on gold has come from persistent outflows from gold-backed exchange-traded funds. Total gold ETF holdings declined for six consecutive days through Wednesday, marking the longest losing streak since April, according to Bloomberg data.
A mix of a hawkish Fed, the U.S.-China trade truce, and significant ETF outflows are all contributing to the corrective move in gold.
Despite the recent correction, gold has still returned more than 50% since the start of the year, bolstered by growing risk aversion and robust central bank buying, the World Gold Council noted on Thursday. Central banks increased their purchases by 28% in the third quarter, reversing an earlier slowdown.
Spot gold surged 0.13% to $4,021.30 an ounce as of Friday 4.12 p.m. in Bangkok.
