The Gold price (XAU/USD) edges lower to a two-week low near $3,235 during the early Asian session on Friday. The easing of trade tensions between the US and its trading partners has dented the safe-haven demand, weighing on the precious metal.
US President Donald Trump announced potential trade deals with India, South Korea, and Japan, seeking to convert his tariff policy into trade agreements. Furthermore, Chinese state media said late Thursday that the US has reached out toChina to begin trade talks regarding Trump's 145% tariffs.
The US Dollar (USD) strengthens due to this positive development, which makes gold less attractive to other currency buyers. "Market sees trade tensions de-escalating and is less concerned about the Fed independence, reducing the demand for safe-haven assets for now," said UBS analyst Giovanni Staunovo.
Following the weaker-than-expected US Q1 Gross Domestic Product (GDP) released on Wednesday, the markets are now pricing higher chances of more Federal Reserve (Fed) rate cuts, although everything hinges on trade deals. This, in turn, might boost the non-yielding Gold price.
The US April employment report will be the highlight later on Friday as it might propel the US Fed to start cutting rates sooner rather than later. If the report shows a weaker outcome, this could weigh on the USD and cap the downside for the USD-denominated commodity price.
Gold has played a key role in human's history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn't rely on any specific issuer or government.
Source: Fxstreet
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