Gold posts worst weekly performance in six months as markets stabilize

Gold prices fell 0.3% on Friday, heading for their sharpest weekly drop in six months. Easing fears of global trade tensions pressured the market, making safe-haven assets less attractive. The bullion has lost nearly 3% over the week.

Earlier, Washington and Beijing reached an agreement to temporarily lift the reciprocal tariffs imposed in April.

Extra pressure on the metal came from US economic data. The Producer Price Index (PPI) fell unexpectedly in April, and retail sales growth showed signs of slowing. Moreover, inflation for the same period proved to be weaker than anticipated. But even with this information in mind, the Federal Reserve (Fed) is still feeling cautiously optimistic.

On Thursday, Fed Vice Chairman Michael Barr stated that the country’s economy remains strong while inflation gradually moves toward the 2% target. 

Investors expect US borrowing costs to go down by 57 basis points by the end of the year, starting in September.

According to Reuters, gold typically weakens in the face of sustained high interest rates and a stable market.