Gold plunges to a 6-month low — is this the golden opportunity smart investors have been waiting for? Check what the numbers say

Gold prices took a sharp hit this week, recording their worst weekly performance in six months. As of Friday, spot gold dropped 0.8% to $3,213.56 per ounce, capping off a 3.3% loss for the week — the steepest since November 2024, according to Reuters. The main drivers behind this slide are a stronger U.S. dollar and the cooling tensions between the U.S. and China, both of which have reduced gold's appeal as a safe-haven asset.

Why is the rising U.S. dollar pulling gold prices down?

The U.S. dollar made gains this week, with the dollar index climbing 0.4%. This matters because gold is priced in dollars, so when the greenback strengthens, it becomes more expensive for investors using other currencies to buy gold. That often leads to lower global demand.

This direct relationship between the dollar and gold often results in gold prices falling when the dollar strengthens, and that’s exactly what we saw this week. As Republic World and Reuters noted, the stronger dollar played a key role in pushing gold prices lower.

How are U.S.-China relations affecting gold demand?

In a surprising turn, U.S.-China trade tensions have eased, with both countries agreeing to temporarily reduce tariffs that had been in place. This has lifted market confidence, encouraging investors to take more risks and move money away from safe-haven assets like gold.

This kind of development shifts investor behavior. When the world feels a little more stable, investors often pull out of gold and put their money into stocks or other higher-return assets. As Reuters highlighted, this calming of trade fears had a clear downward effect on gold this week.

What role is U.S. economic data playing in gold's decline?

Recent data from April showed that U.S. inflation and retail sales were weaker than expected. Despite this, Federal Reserve Governor Michael Barr stated that the overall economy is still strong and inflation is slowly moving toward the 2% target. However, Barr also warned that uncertainty around trade policy still remains.

This mixed data has left the market unsure of what the Federal Reserve will do next. For now, interest rate cuts are expected to begin around September, and that could help gold prices recover in the longer term.

How are other precious metals performing amid gold's fall?

Gold’s rough week also impacted other precious metals, which often follow similar price trends:

• Silver fell by nearly 1% to $32.37 per ounce, as reported by Reuters and Mint.
  
  
• Platinum dropped 0.5% to $984.83 per ounce.
  
  
• Palladium saw a steeper fall, losing 1.2% to $956.43 per ounce.
  
  

These metals, like gold, are sensitive to macroeconomic conditions and investor sentiment, both of which shifted notably this week.

Is regional demand for gold picking up after the price drop?

Interestingly, the decline in global gold prices has sparked demand in key Asian markets.

In India, dealers responded by offering discounts of up to $34 per ounce compared to official domestic prices — a big jump from last week's $16 discount. Domestic gold in India is now trading around 92,900 rupees per 10 grams, significantly down from its April peak of 99,358 rupees, Reuters reported. That’s drawn in some buyers, though many are still waiting to see if prices will fall further.

In China, the gold premium over spot prices ranged from $9 to $50 per ounce, slightly lower than the week before. Even so, analysts say this dip has attracted bargain hunters, showing that lower prices can still stimulate demand in important markets.

What’s the outlook for gold moving forward?

While it’s been a tough week for gold, analysts don’t see this as the end of the road. Investor interest in gold usually grows during uncertain times, and with inflation still a concern and potential interest rate cuts on the horizon, many expect prices to stabilize or even rise again later this year.

In summary, this week’s drop in gold prices — down 3.3% to $3,213.56 per ounce — has been driven by a mix of macroeconomic forces: a stronger U.S. dollar, easing U.S.-China tensions, and conflicting economic signals from the U.S. But with global uncertainties far from over, gold may still find its footing in the months ahead.

FAQs:

Q1: Why are gold prices dropping this week?
Gold prices are falling mainly because the U.S. dollar is stronger and trade tensions are easing.

Q2: What is the current gold price per ounce?
As of Friday, spot gold is priced at $3,213.56 per ounce.