Gold prices fell about 2% on Thursday, closing at $3,222.66 per ounce and marking a two-week low.
The pullback followed announcements by President Trump about potential trade agreements with India, South Korea and Japan. News of improved trade prospects raised investor risk tolerance and reduced demand for gold, which is traditionally sought as a safe-haven asset during times of uncertainty.
A stronger U.S. dollar also weighed on bullion. When the dollar gains ground, gold typically becomes more expensive for holders of other currencies, which can dampen global demand and push prices lower.
Looking ahead, market participants are watching U.S. economic data closely. Analysts note that a softer-than-expected U.S. employment report, scheduled for release Friday, could reverse the recent decline and lift gold toward the $3,500-per-ounce area over the coming months. Expectations for labor-market weakness often increase the appeal of gold as an inflation hedge and store of value.
Separately, economic data showed the U.S. economy contracted in the first quarter of fiscal 2025 for the first time in three years. Part of that slowdown was attributed to businesses accelerating imports ahead of anticipated tariff increases, which shifted spending patterns and affected GDP growth for the quarter.
In summary, near-term downward pressure on gold has been driven by easing geopolitical concerns related to trade and a firmer dollar, while macroeconomic indicators and upcoming employment data could create renewed upside risk for bullion.