Gold Dips As US-EU Trade Deal Improves Risk Appetite

(RTTNews) - Gold prices fell on Monday as the US dollar gained, cheered by the announcement of a framework trade agreement between the US and the EU which brings to an end, long-drawn hectic negotiations. This development improved the appeal for riskier assets. Notably, gold prices have been down now for four consecutive sessions.

Front Month Comex Gold for July delivery fell $23.70 (or 0.71%) to $3,310.30 per troy ounce today.

Front Month Comex Silver for July delivery decreased by 14.10 cents (or 0.37%) to $38.026 per troy ounce today.

After tense negotiations, to avert a trade war with the US, the EU has settled for a 15% tariff on its US exports (about triple the 4.8% now in force) along with a commitment to invest heavily in the US energy sector.

The news of this EU-US framework trade agreement was announced by US President Donald Trump on Sunday. Notably, he had announced a deal with Japan (another major trading partner) last week.

Even as the gains for the EU from this agreement is being debated by economists, as the August 1 deadline for "reciprocal tariffs" suspension period ends in three more days, the list of countries having bargained for a "deal closure" is growing more.

Traders feel that more such deals would allay global trade disruption fears and encourage investments in riskier assets.

Today, the US and China have begun a fresh round of negotiations in Sweden as their commitment date for keeping tariffs lower until August 12 is only about a fortnight away.

On the geopolitical front, Houthi rebels have warned of continuing their attacks on any merchant vessel passing through the Red Sea or Suez Canal that is linked to Israel. No serious retaliation by the US or the West in favor of Israel has helped in maintaining a peaceful (although tense) situation in the Middle East.

On the monetary front, US treasury yields were slightly higher today with the 10-year yield up 2 basis points, the 2-year yield up 1.3 basis points, and the 30-year bond yield up 2 basis points.

The Federal Reserve is set to meet for two days beginning tomorrow after which they would not meet again for more than seven weeks until September 16.

Remarks by the US Fed Chair after the meeting along with a slew of data to be released this week comprising expenditure index, job openings, labor turnover survey, ADP's private payrolls report, initial jobless claims, nonfarm payrolls, etc., would indicate the trajectory that the US economy and consequently the US Dollar would take in the coming days.

With Trump himself dissatisfied on the current benchmark lending rates, clues on gold prices could be more visible after the Fed meet concludes on Wednesday.