Gold prices weakened on Friday, weighed down by a stronger U.S. dollar and signs of progress in U.S.-EU trade negotiations, which have dampened demand for safe-haven assets.

Spot gold fell 0.9% to $3,336.01 an ounce at 2:01 PM ET (18:01 GMT). U.S. gold futures closed down 1.1% at $3,335.6. The U.S. dollar index, open a new tab, rebounded from a more than two-week low, making bullion more expensive for overseas buyers.

"The Japan deal is significant, and there are hopes for a U.S.-EU deal before the August 1 deadline. That's reducing safe-haven demand as rising risk appetite drives capital into riskier assets," said Peter Grant, vice president and senior metals strategist at Zaner Metals. Following this week's US-Japan trade deal, the European Commission stated that a trade deal with the US is close to being reached, although EU members have agreed to retaliatory tariffs on US goods if talks fail.

Data-wise, US jobless claims fell to a three-month low, signaling a stable labor market despite sluggish hiring. The stable labor market data is expected to give the Federal Reserve room to keep interest rates steady at 4.25%-4.50% at its meeting next week, even though inflation is showing signs of rising due to US President Donald Trump's import tariffs.

Trump's surprise visit to the central bank marked a new attempt to pressure Chairman Jerome Powell, with the President again urging a deep interest rate cut. "Gold may attract buying interest at $3,300, but it probably won't reach a new all-time high until after the Fed decision," Grant said, adding that the meeting could signal an interest rate cut later this year. Gold typically performs well during periods of uncertainty and low interest rates.

Spot silver fell 2.3% to $38.20 an ounce, but was still on track for a weekly gain. Platinum fell 0.9% to $1,395.31, while palladium fell 0.7% to $1,219.07, with both metals weakening throughout the week. (alg)

Source: Reuters