Gold prices drop as Trump's tariffs prompt reassessment of market risk

Gold prices fell on Friday as investors adjusted their risk outlook following US President Donald Trump's announcement of tariff measures, which, while offering more clarity on market trends, raised concerns over a potential economic slowdown.

Spot gold dropped 0.3%, reaching $3,103.00 per ounce by 0510 GMT. Despite this, the precious metal remained on track for a fifth consecutive weekly gain, supported by its safe-haven appeal. Gold had reached three record highs earlier this week, buoyed by growing market uncertainty.

US gold futures edged up 0.1%, reaching $3,123.40, following a steep drop of more than 2% in the previous session due to a broader market sell-off triggered by Trump’s import tariffs. The pullback came just hours after gold reached a record high of $3,167.57.

Ilya Spivak, head of global macro at Tastylive, commented: "Gold tends to rally amid difficult-to-price uncertainty, such as the start of a war, but loses that support once markets learn how to price the risks involved." He added that Trump’s tariff measures had made the path forward clearer, reducing some of gold’s “market confusion” premium.

Trump announced a 10% baseline tariff on all imports to the US and increased duties on certain major trading partners. In response, US trading partners have threatened to escalate the trade war, sparking concerns over potential price increases in the world’s largest consumer market.

The market now awaits the US non-farm payrolls report, which could offer insights into the Federal Reserve’s interest rate path and its potential impact on gold prices.

Meanwhile, other precious metals saw mixed movements: Spot silver declined 1% to $31.54 an ounce, platinum fell 0.2% to $950.85, and palladium rose 0.4% to $932.00.