Sybilla Gross and Jack Ryan

Tue, May 27, 2025, 9:11 AM2 min read

(Bloomberg) -- Gold extended declines as the dollar swung to a gain and demand for haven assets cooled, with investors also weighing prospects for improving trade relations between the US and the European Union.

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Bullion fell 1.5% as signs that Japan may be prepared to adjust debt issuance pushed global bonds and the US currency higher. A stronger greenback makes gold more expensive for buyers in other currencies, while lower debt yields reduce the appeal of the non-interest bearing precious metal.

Investors were also less averse to risk as the EU and the US signaled a willingness to end a stalemate and work toward a trade deal over the next six weeks, in the first major thaw in their frigid economic relations since President Donald Trump’s second term began in January.

Demand for safer assets like gold has been impacted as signs emerge that the White House may be making progress in negotiations with some trading partners. Gold-backed exchange-traded funds registered five straight weeks of outflows since their holdings peaked at the highest level in more than a year in mid-April, according to Bloomberg calculations.

But markets remain in wait-and-see mode, assessing a number of risks including the swelling US deficit, ongoing trade talks, and worsening conflicts in the Middle East and Ukraine.

Gold has advanced by more than a quarter this year, though prices are currently trading about $200 below an all-time-high set last month.

Investors are also gearing up for the Federal Reserve’s preferred inflation measure, the US personal consumption expenditures price index excluding food and energy, which will be released Friday.

Spot gold fell 1.5% to $3,294.73 an ounce at 10:46 a.m. in London. The Bloomberg Dollar Spot Index was up 0.5%. Platinum extended declines after last week reaching the highest level in two years on signs of market tightness. Silver and palladium also fell.

--With assistance from Yvonne Yue Li.

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