Gold Prices Slip Amid US-UK Trade Deal and Stable Dollar: What Should Investors Do Now?

Gold prices fell Friday morning as global trade optimism and a firm US dollar dimmed the metal's safe-haven appeal.

In early trade today, MCX Gold June 5 futures slipped 0.24% to ₹95,940 per 10 grams around 9:10 AM, following weak global cues and subdued domestic demand. The broader sentiment around gold has turned cautious as international trade tensions ease, undermining its status as a hedge against uncertainty.

US-UK Trade Agreement Dents Gold's Safe-Haven Appeal

International gold prices dipped sharply after US President Donald Trump announced a landmark trade deal with the UK. The agreement—hailed as a "breakthrough"—boosted investor sentiment and raised expectations for further deals with other major economies like China, India, and Japan.

As trade tensions ease, the need for gold as a safe-haven asset declines, triggering a retreat from recent highs. Gold futures fell to around $3,300 per troy ounce, pressured by a stronger US.S. dollar and weakening demand.

Dollar Strength Adds Pressure on Gold Prices

The firm US dollar, which is on track to register a weekly gain against most major currencies, added to gold's downside. A stronger US dollar increases the cost of gold for foreign investors, diminishing its attractiveness.

Furthermore, the US Federal Reserve's recent stance—indicating no urgency to cut interest rates—has reinforced the dollar's strength, further dragging gold lower.

"The Fed's hawkish tone amid rising inflation concerns has limited the upside for gold, supporting the dollar instead," Trivedi added.

China Hopes for Trade Progress Too

In parallel, China expressed optimism about resolving trade issues with the US. Vice Foreign Minister Hua Chunying stated that China is confident in managing trade tensions ahead of high-level talks in Switzerland. This optimism has further eased fears of an escalating trade war, putting additional pressure on gold prices.

What Should Investors Do?

Although gold has long been considered a safe-haven asset, its recent decline indicates a short-term bearish trend. However, long-term investors may consider using this dip to accumulate gradually, especially if geopolitical tensions or inflation risks re-emerge.

For short-term traders:

• Avoid fresh longs until gold finds support above ₹96,000 again.
• Watch the US dollar index and upcoming trade talks between the US and China for cues.

For long-term investors:

• Consider systematic buying on dips below ₹95,500, keeping a horizon of 12-18 months.
• Diversify holdings with silver or inflation-linked bonds to hedge against volatility.

Final Thoughts

Gold prices have slipped amid improving global trade sentiment and a stronger US dollar. While the near-term outlook remains bearish, long-term fundamentals, like central bank buying, inflation, and geopolitical risks, could still support gold. Stay cautious but opportunistic.