Gold prices declined in the European market on Monday, deepening losses for the fourth consecutive day and recording their lowest level in two weeks. The drop was driven by a slowdown in safe-haven demand amid prevailing positive sentiment in global markets, in addition to the rising US dollar in the foreign exchange market.
The United States and the European Union reached a major trade agreement ahead of the August 1 deadline, and intensive trade negotiations are set to begin later today between Washington and Beijing in the Swedish capital, Stockholm.
The Federal Reserve’s monetary policy meeting kicks off tomorrow, Tuesday, with decisions to be announced on Wednesday. Expectations point to interest rates remaining unchanged for the fourth consecutive meeting.
The Price
• Gold prices today: Gold declined by 0.4% to $3,323.84, down from the opening price of $3,337.62, after hitting a session high of $3,345.37.
• At Friday’s close, gold prices lost 0.9%, marking a third straight daily loss, under pressure from the rising US dollar.
• Over the past week, gold fell 0.4%, posting a second consecutive weekly loss due to correction and profit-taking from the five-week high of $3,438.94 per ounce.
Positive Trade Developments
The United States signed a framework trade agreement with the European Union on Sunday, imposing a 15% tariff on most European goods — half the rate previously threatened by Trump as of August 1. This move helped avert a broader trade war between the two allies, who together account for nearly one-third of global trade.
Senior US and Chinese negotiators are scheduled to meet in Stockholm on Monday to extend the current trade truce and prevent sharp tariff increases.
The US Dollar
The US Dollar Index rose by 0.5% on Monday, extending its gains for the third consecutive session, reflecting continued strength in the greenback against a basket of major and minor currencies.
This rally comes as concerns over a US economic slowdown eased following recent trade agreements with Japan and the EU, along with strong economic data suggesting the Federal Reserve may delay resuming interest rate cuts.
Federal Reserve
The Federal Reserve’s crucial monetary policy meeting begins tomorrow, Tuesday, with decisions expected on Wednesday. Projections point to no change in US interest rates — marking the fifth straight meeting with stable rates.
The policy statement and comments from Fed Chair Jerome Powell are expected to provide clear and strong signals regarding the future of interest rates in the United States for the remainder of the year.
US Interest Rates
• According to the CME Group’s FedWatch Tool: The probability of a 25 basis point rate cut at the July meeting is currently priced at 3%, while the probability of holding rates steady is at 97%.
• The probability of a 25 basis point rate cut in September is currently priced at 62%, with a 38% chance of rates remaining unchanged.
Gold Outlook
• Reliance Securities senior analyst Jigar Trivedi said the agreement eased transatlantic trade tensions, putting pressure on gold.
• Trivedi added: In the short term, we do not expect significant or sharp fluctuations in gold prices, as investor focus shifts to a pivotal week for US monetary policy and economic data.
SPDR Fund
Gold holdings at the SPDR Gold Trust — the world’s largest gold-backed ETF — remained unchanged on Friday, keeping total holdings at 957.09 metric tons, the highest level since June 23.
