Bengaluru — Gold prices edged lower on Friday and were on track for their biggest weekly decline in two to two-and-a-half  years as a stronger dollar weighed, while optimism around US-China trade talks dented bullion’s safe-haven appeal.

Spot gold was down 0.1% at $1,465.97 an ounce at 11.01am GMT, poised for its biggest weekly drop — about 3% — since May 2017. On Thursday, prices fell to their lowest since October 1 at $1,460.75. US gold futures were steady at $1,466.90.

“Gold is down because the dollar is doing well and some people who bought gold as a safe haven are moving out,” ABN Amro analyst Georgette Boele said. “You will get some profit-taking pushing gold prices lower.”

The dollar index was headed for a weekly gain as it benefited from news that China and the US had agreed to roll back tariffs as part of a potential preliminary pact to end their trade war. However, some doubts emerged as officials inside and outside the White House opposed the notion of giving up punitive tariffs. The uncertainty limited bullion’s fall.

“We are trading on a lot of speculation right now and there’s no solid evidence or anything specific,” Craig Erlam, Oanda senior market analyst, said, adding that gold could move back to $1,440 if a phase one trade deal were signed in December.

Meanwhile, European stocks benchmarks retreated from the previous session’s highs as conflicting signals from China and the US on progress made in trade talks deflated market hopes of a near-term truce.

Reflecting sentiment, holdings in the world’s largest gold-backed exchange-traded fund (ETF), SPDR Gold Trust, dipped 0.16% to 914.38 tonnes on Thursday.

“While subdued global economic growth and low interest rates should keep gold prices elevated, positive developments for gold have now largely played out,” analysts at Capital Economics said in a note, as it raised its end-2020 gold price forecast to $1,450 an ounce, from $1,350.

Gold prices have risen more than 14% so far this year mainly due to the trade war.

In other metals, silver dropped 0.8% to $16.97 an ounce, and was set to fall more than 6% for the week, its steepest drop since October 2016. Platinum fell 1.16% to $897.94 an ounce, poised for a 5% drop for the week. Palladium lost 0.6% to $1,791.40 and was headed for a weekly decline after rising for four weeks.


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