Gold prices fell more than 2% on Friday (October 17th) after hitting a record high above $4,300 an ounce, pressured by a strengthening dollar and comments by U.S. President Donald Trump that "full-scale" tariffs on China would be unsustainable.

Spot gold fell 1.7% to $4,251.19 an ounce at 11:37 a.m. ET (15:37 GMT), after hitting an all-time high of $4,378.69 earlier in the session. The precious metal broke through $4,300/ounce for the first time on Thursday, and is expected to post a weekly gain of 5.8%.

U.S. gold futures for December delivery fell 0.8% to $4,268.60. The dollar index rose 0.1%, making dollar-priced bullion more expensive for overseas buyers. Early in the trading session, gold was on track for its biggest gain since September 2008, when the Lehman Brothers bankruptcy triggered the global financial crisis.

"I think Trump's softer tone since the initial announcement of 100% tariffs has eased tensions in the precious metals trade somewhat," said Tai Wong, an independent metals trader. Trump on Friday confirmed a meeting with his Chinese counterpart, easing market concerns about an escalation in the trade conflict between the two countries.

Gold, a traditional hedge against uncertainty, has surged more than 62% this year, driven by geopolitical tensions, central bank buying, a shift away from the dollar, and strong inflows into gold exchange-traded funds (ETFs). Bets on lower US interest rates have also supported this non-yielding asset.

"We project gold prices to average $4,488 in 2026, and see further upside risks from broader structural factors supporting the market," said Suki Cooper, global head of commodity research at Standard Chartered Bank.

Markets are expecting a 25 basis point interest rate cut at the Federal Reserve's October meeting and another in December. HSBC raised its 2025 average gold price forecast by $100 to $3,455 per ounce, and projected it would reach $5,000 per ounce by 2026. Meanwhile, physical gold demand in Asia remains strong despite new record highs, with premiums in India reaching a decade-high ahead of the festival.

Spot silver fell 4% to $52.06 per ounce, after hitting a record high of $54.47, following the rally in gold prices. The precious metal is expected to see a weekly gain of 3.7%. Platinum fell 5.7% to $1,614.65, and palladium fell 7.1% to $1,498.75. (alg)

Source: Reuters