Gold prices eased on Friday and were on course for their first weekly decline in nine weeks, weighed down by a stronger US dollar and investor caution ahead of key US inflation data due later in the day. Spot gold fell 0.2% to $4,116.09 per ounce as of 0504 GMT, while US gold futures for December delivery slipped 0.4% to $4,131.10 per ounce, according to Reuters.
Bullion has lost about 3% so far this week, its steepest fall since mid-May as traders booked profits after a prolonged rally that drove prices to record highs earlier this month. The dollar index gained for a third consecutive session, making gold more expensive for non-US buyers and dampening sentiment.
“A meeting between the US and Chinese leaders stands a decent chance of de-escalating trade tensions, which is aiding the dollar and drying up some safe-haven demand for gold,” said Tim Waterer, Chief Market Analyst at KCM Trade, as reported by Reuters.
The White House confirmed that US President Donald Trump will meet Chinese President Xi Jinping next week during his Asia trip, a move that could ease trade tensions that have dragged on global growth.
US CPI in focus as traders brace for Fed decision
Market attention was now centered on the US Consumer Price Index (CPI) data, expected to show core inflation holding at 3.1% in September. The report, delayed by the government shutdown, will set the tone for the Federal Reserve meeting next week, where traders have nearly priced in a 25-basis-point rate cut, Reuters reported.
“From gold’s perspective, a tame CPI print would be welcomed as this would keep the Fed on track to cut rates twice before year-end,” Waterer said. “But any upside surprises in inflation would likely see the dollar gain further traction higher, which could be to the detriment of gold.”
Gold tends to perform better when interest rates are low, as it reduces the opportunity cost of holding non-yielding assets. A stronger inflation reading, however, could strengthen the dollar and prolong the correction.
Profit booking and ETF outflows weigh on sentiment
Analysts said the correction was largely technical after a rapid rally that left valuations stretched. Gold-backed exchange-traded funds (ETFs) saw their largest single-day decline in holdings in five months, signaling portfolio rebalancing by institutional investors.
“Gold prices fell to around $4,110 per ounce on Friday, on track to end its nine-week winning streak, pressured by heavy selling after repeatedly hitting record highs in recent sessions,” said Jigar Trivedi, Senior Research Analyst at Reliance Securities. “The metal dropped more than 5% early in the week, marking its largest intraday loss in five years.”
Trivedi added that “MCX Gold December may drop to Rs 1,23,000 per 10 grams as the undertone in world markets is weak.” Despite the pullback, he noted that gold remains up more than 50% year-to-date, supported by trade tensions and expectations of further Fed rate cuts.
Trade diplomacy, sanctions and macro risks shape outlook
The upcoming meeting between Trump and Xi has created cautious optimism among traders. Hopes of progress in trade negotiations have reduced near-term demand for safe-haven assets.
“Gold prices are set to break their nine-week winning streak after a sharp decline from recent highs,” said Darshan Desai, CEO of Aspect Bullion & Refinery. “The drop comes as investors book profits amid stretched valuations, renewed optimism over a potential US-China trade deal, and a stronger US dollar.
“Looking ahead, markets will focus on the release of US CPI data later today, updates on the US government shutdown, and next week’s meeting between US President Donald Trump and Chinese President Xi Jinping. A successful trade agreement between the two nations could put additional downward pressure on gold prices, while any escalation in US-Russia tensions or sanctions could help support prices at lower levels,” Desai said.
Meanwhile, the US has imposed new sanctions on Russia, aiming to push Moscow toward a ceasefire in Ukraine. Analysts said the geopolitical backdrop remains complex and could keep volatility high across commodities.
JPMorgan: Long-term bullish despite near-term correction
Despite the pullback, global investment bank JPMorgan has reiterated its bullish stance, forecasting that gold will average $5,055 per ounce by the fourth quarter of 2026, as reported by Reuters. The forecast assumes sustained investor interest and central-bank purchases averaging 566 tonnes a quarter in 2026.
“Gold remains our highest conviction long for the year, and we see further upside as the market enters a Fed rate-cutting cycle,” said Natasha Kaneva, Head of Global Commodities Strategy at JP Morgan.
Gregory Shearer, Head of Base & Precious Metals Strategy, added that the combination of “a Fed cutting cycle with overlays of stagflation anxiety, concerns around Fed independence, and broader debasement hedging” supports continued upside.
The bank also emphasized that the recent rally is not purely a de-dollarisation move. “The rally is not a de-dollarization or debasement story, but it is most likely a dollar diversification story,” JP Morgan said, noting that foreign investors are gradually reallocating small portions of their US asset holdings into gold.
JPMorgan analysts described the latest pullback as a “healthy consolidation” after rapid price gains since August. “It’s normal if you’re paralyzed with fear, because the price moved so fast,” Kaneva said. “It’s just a very clean story. You have a lot of buyers, and you have no sellers.”
The bank maintained a long-term target of $6,000 per ounce by 2028, urging investors to adopt a multi-year view rather than focusing on short-term volatility.
Silver, platinum and palladium show mixed trends
Among other precious metals, spot silver fell 0.5% to $48.67 per ounce, marking a 6% weekly decline, the sharpest since March. Platinum gained 0.3% to $1,630.60, while palladium slipped 1.8% to $1,430.35, Reuters reported.
The divergence noted that while gold and silver trade largely on macro and monetary cues, industrial metals such as platinum and palladium are more sensitive to manufacturing and supply trends.
Analysts see correction as a pause, not a reversal
Market watchers largely view this week’s decline as a pause rather than the start of a reversal. With inflation uncertainty, monetary easing expectations, and geopolitical risks still in play, analysts believe gold’s structural uptrend remains intact.
For now, all eyes are on the CPI release. A softer print could reignite the rally by bolstering rate-cut bets, while a hotter reading might deepen the correction.
Still, the broad takeaway from both brokers and global banks is clear: gold’s short-term weakness does little to dim its long-term shine.