On Thursday, precious metals experienced a downturn as geopolitical tensions eased following President Trump’s reduction of tariff threats and talks about Greenland. The rise in the dollar’s value also contributed to the drop in prices. Market participants are eagerly awaiting important U.S. economic indicators to shed light on the direction of monetary policy. Spot gold saw a decrease of 0.8%, trading at $4,799.79 per ounce as of 0136, after reaching a record high of $4,887.82 in the previous session. U.S. gold futures for February delivery fell by 0.6%, closing at $4,806.60 per ounce.
Trump unexpectedly backed down on Wednesday from his threats to impose tariffs regarding Greenland, ruled out the use of force, and suggested that a resolution might be on the horizon to address a conflict over the Danish territory that could have strained transatlantic relations for years to come. The dollar gained strength, as benchmark 10-year U.S. Treasury yields pulled back from their multi-month highs, and market indexes rose after the announcement of Trump’s tariff reversal.
An appreciation of the dollar raises the cost of dollar-denominated metals for international buyers. Meanwhile, U.S. Supreme Court justices voiced doubts about President Trump’s unusual effort to remove Federal Reserve Governor Lisa Cook in a case that could affect the autonomy of the central bank. Traders are looking forward to the release of November’s Personal Consumption Expenditures data, which is the Federal Reserve’s preferred measure of inflation, along with weekly jobless claims expected to be announced later today, as they seek further insights into the direction of monetary policy. The U.S. Federal Reserve is expected to maintain interest rates at their current levels during its meeting on January 27-28, despite President Trump’s calls for cuts.
Gold, known for not generating interest, usually thrives when interest rates are low. Spot silver declined by 0.9% to $92.38 an ounce, after reaching a peak of $95.87 on Tuesday. Spot platinum fell by 2.7% to $2,415.60 per ounce after reaching a peak of $2,511.80 on Wednesday, while palladium dropped by 1% to $1,821.50, retreating from a one-week high achieved in the previous session.