Gold Neutral amid U.S- European Trade Deal
The bullion asset held steady in London trade on Monday as demand for the safe-haven asset decreased due to a new trade agreement between the US and the EU
Quick overview
- Gold prices remained stable in London as demand waned following a new US-EU trade agreement that boosted market confidence.
- XAU/USD and gold futures both saw a slight increase of 0.1 percent amid cautious trading ahead of the Federal Reserve's interest rate decision.
- The US-EU agreement imposed a 15 percent tariff on European goods, reducing the risk of a trade conflict and improving sentiment.
- Federal Reserve Chair Jerome Powell faces pressure from President Trump, who is advocating for rate cuts amid ongoing trade negotiations.
The bullion asset held steady in London trade on Monday as demand for the safe-haven asset decreased due to a new trade agreement between the US and the EU, which increased risk appetite. Ahead of this week’s Federal Reserve interest rate decision, in which the central bank is anticipated to keep rates unchanged, traders also remained cautious.
XAU/USD increased 0.1 percent to $3,340 per oz, while gold futures increased 0.1 percent to $3,396.70/oz.
The US-EU agreement, which was announced on Sunday, imposed a 15 percent tariff on most European goods entering the US, half of the previously threatened rate. This helped prevent a full-scale trade conflict and improved market sentiment; the Fed decision is still pending.
Top U.S. and Chinese representatives were scheduled to convene in Stockholm on Monday to talk about extending their tariff truce for an additional three months
The Federal Reserve is projected to maintain interest rate stability amid resident Donald Trump’s repeated calls for rate cuts, which will be the main focus this week.
Fed Chair Jerome Powell has been at odds with Trump and his supporters, who have called for Powell’s dismissal in recent months, because he has indicated that the Fed is unlikely to cut anytime soon due to uncertainty surrounding the inflationary effects of Trump’s tariffs.
Trump paid a personal inspection of an ongoing renovation project at the Fed on Thursday, which has been suggested as a possible way to fire Powell. Next week will also see the expiration of Trump’s August 1 deadline for his high trade tariffs, with all eyes on whether additional trade agreements will be reached.
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