Gold prices rose by more than 1% on Friday, supported by a decline in the U.S. dollar, as markets await an important meeting between the United States and China to discuss trade tensions between the two countries.
Gold rose in spot transactions by 1.1% to reach $3,340.29 per ounce by 17:46 GMT, recording weekly gains of about 3.1%. U.S. gold futures also rose by 1.1% to close at $3,344.
Gold is known as a safe haven during times of geopolitical and economic tensions, and it has risen by more than 27% since the beginning of the year.
This rise came after U.S. President Donald Trump indicated that imposing an 80% tariff on Chinese imports is "appropriate," ahead of the anticipated talks between Washington and Beijing over the weekend.
At the same time, the U.S. dollar index fell by 0.3%, making gold priced in dollars less expensive for holders of other currencies.
Geopolitically, tensions between India and Pakistan have escalated, with both countries exchanging accusations of launching new military attacks using drones and artillery, in the third day of the most intense fighting in nearly three decades between the two nuclear neighbors.
David Meger, director of metals trading at High Ridge Futures, said: "It is clear that the ongoing uncertainty regarding tariffs is the primary factor supporting gold; however, we are not as optimistic currently as we were in past months, and we may witness a period of consolidation or a temporary pullback in prices."
In the physical market, India - the second-largest consumer of gold in the world - witnessed a weakening in demand this week, prompting traders to offer discounts on prices, especially as local prices reached record levels due to the depreciation of the rupee. In contrast, buying interest increased in China after the official holidays ended.
In his statements, Michael Barr, the Governor of the U.S. Federal Reserve, warned that President Trump's current trade policies could contribute to rising inflation rates, slowing growth, and rising unemployment later this year, which could put policymakers in front of difficult economic decisions.
In other precious metals, silver rose by 0.8% to $32.75 per ounce, platinum increased by nearly 2% to $995.10, while palladium grew by 0.2% to $977.68.