PRECIOUS-Gold pulls back after record high on firm dollar, Trump's China remarks

By Sherin Elizabeth Varghese

Oct 17 (Reuters) - Gold prices fell more than 2% on Friday after hitting a record high above $4,300 per ounce, pressured by a firmer dollar and U.S. President Donald Trump's comment that a "full-scale" tariff on China would be unsustainable.

Spot gold XAU= was down 2.6% at $4,212.99 per ounce at 12:39 p.m. ET (1639 GMT), after scaling an all-time high of $4,378.69 earlier in the session. The metal breached $4,300/oz for the first time on Thursday, and is set for a weekly gain of about 5%.

U.S. gold futures GCcv1 for December delivery were down 1.8% to $4,225.80.

The dollar index .DXY was up 0.1%, making dollar-priced bullion more expensive for overseas buyers. USD/

Earlier in the session, gold had temporarily been on track for its biggest weekly gain since September 2008 when the collapse of Lehman Brothers fuelled the global financial crisis.

"I think Trump's more conciliatory tone since the initial announcement of 100% tariffs has taken a little heat out of the precious trade," said Tai Wong, an independent metals trader. .N

Trump on Friday confirmed a meeting with his Chinese counterpart, easing some market jitters over the escalating trade conflict between the two countries.

Gold, a traditional hedge against uncertainty, has surged more than 62% this year, driven by geopolitical tensions, central bank buying, a switch out of the dollar, and strong inflows into gold exchange-traded funds. Bets on U.S. interest rate cuts have also supported the non-yielding asset.

"We're forecasting gold to average $4,488 in 2026, and see further upside risk from broader structural factors supporting the market," said Suki Cooper, global head, commodities research at Standard Chartered Bank.

Markets are pricing in a 25-basis-point cut at the Federal Reserve's October meeting and another in December. FEDWATCH

HSBC raised its 2025 average gold price forecast by $100 to $3,455 per ounce, and projected it would reach $5,000 an ounce in 2026.

Meanwhile, physical gold demand in Asia stayed firm even as prices hit fresh records, with Indian premiums at a decade-high ahead of festivals.

Spot silver XAG= fell 5.1% to $51.48 per ounce, after hitting a record high of $54.47, tracking the rally in gold. The metal is set for a 2.6% weekly gain.

Platinum XPT= fell 6.1% to $1,607.69 and palladium XPD= lost 8.1% to $1,483.75.