Gold falls on US-EU trade deal agreement

Gold fell to a near three-week low on Monday as a US-European Union trade accord lifted the dollar and risk sentiment, while investors awaited fresh cues on rate policy from this week’s Federal Reserve meeting.

Spot gold fell 1% to $3,304.87 per ounce as of 10:10am, touching its lowest level since July 9.

US gold futures were down 0.6% at $3,320.20 per ounce.

The US dollar index rose to a one-week high, making bullion more expensive for overseas buyers.

A weekend deal between US President Donald Trump and the European Commission imposed a 15% tariff on EU goods, half the rate initially threatened, easing fears of a broader trade war.

That pact came on the heels of last week’s US-Japan agreement, while US and Chinese officials will resume talks in Stockholm on Monday, aiming to extend their trade truce by another 90 days.

However, a US trade representative said no major breakthrough was expected with China, noting discussions would focus on monitoring and implementing existing commitments.

The US Federal Reserve is expected to keep its benchmark rate in the 4.25%-4.50% range when its two-day meeting concludes on Wednesday.

Markets, meanwhile, continue to price in a potential September rate reduction.

Gold tends to do well in a low-interest-rate environment.

Elsewhere, spot silver was down 0.2% at $38.05 per ounce, while platinum fell 1.8% at $1,375.88 and palladium gained 0.5% to $1,226.25.

Reuters