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Gold drops as risk appetite wanes on Trump's tariff clarification

Gold prices dropped on Friday, as investors reassessed risk in light of U.S. president Donald Trump's new tariffs. These measures have clarified market trends and raised concerns about economic slowdown.

As of 0305 GMT, spot gold was down by 0.5%, at $3,097.99 per ounce. Gold was still on course for a five-week gain. Its safe-haven appeal helped gold reach three records this week.

U.S. Gold Futures declined by 0.1% to $3.118.90.

Gold dropped by more than 2% in the previous session as traders were weighed down by a wider market decline sparked Trump's tariffs on imports.

This sharp drop came only hours after the record-breaking gold price of $3167.57.

Ilya Spirak, global macro head at Tastylive, said that gold tends rally during times of uncertainty and difficulty in pricing. However, once the markets have learned how to value the risks involved the support tends to fade.

The Trump administration has chosen a path that is less contested and more visible. It's also easier to price. This is reducing some of the "market confusion premium" on gold.

Trump announced that he would impose an initial 10% tariff on all imports into the U.S., and a higher duty on some of America's largest trading partners.

Tariffs sparked fears that prices would rise dramatically in the largest consumer market.

Analysts said that Federal Reserve officials who were seeking more information on Trump's plans for trade got more than they expected when he announced sweeping tariffs. They noted that this could drastically reshuffle the outlook of the country's economy.

The market is now awaiting the U.S. Non-Farm Payrolls Report, which may provide insight into the Fed's rate path.

Spot silver fell 1% to $11.56 per ounce. Platinum dropped 0.6% at $946.40 and palladium declined 0.8% at $920.75.

(source: Reuters)