Gold prices edged up on Monday as the market awaited key developments in U.S. trade talks and the U.S. Federal Reserve’s policy meeting scheduled for next week.
In Dubai, gold rates witnessed notable increases, with 24-carat gold rising AED1 to AED404.75 and 22-carat gold gaining AED0.75 to AED374.75. In addition, 21-carat gold was up AED1.25 to AED359.5 and 18-carat gold rose AED0.75 to AED308.
As of 5:30 GMT, spot gold was up 0.44 percent to $3,366.28, while U.S. gold futures gained 0.48 percent to $3,374.52.
U.S. dollar declines as tariffs deadline looms
The U.S. dollar index fell 0.10 percent to 98.38, making gold less expensive for other currency holders. The dollar’s muted start to the week has supported the early rise in gold prices as the August 1 deadline for U.S. tariffs looms. As the deadline approaches with no new trade deals emerging, gold prices are set to rise towards the $3,400 level.
Investors are closely watching progress in trade talks ahead of U.S. President Donald Trump’s August 1 deadline, with Commerce Secretary Howard Lutnick continuing to express confidence in securing a deal with the European Union.
Meanwhile, reports suggested that Trump may visit China before the Asia-Pacific Economic Cooperation (APEC) summit, scheduled for October 30 to November 1, or potentially meet Chinese President Xi Jinping on the sidelines of the event in South Korea.
“From a fundamental standpoint, the ongoing episode over central bank independence and policy direction triggered safe-haven buying last week, although the momentum seems to have faded, the tensions still remain. Furthermore, VIX has entered a seasonally strong period. As markets are overheated and sentiments are overly optimistic, a short-term correction in the equity markets may be possible, paving the way for safe-haven flows,” said Vijay Valecha, chief investment officer, Century Financial.
European Central Bank to keep rates steady
In other developments, the European Central Bank is expected to keep interest rates unchanged at 2 percent during its meeting later this week, following a series of recent cuts.
In the U.S., Federal Reserve Governor Christopher Waller last week backed the case for a July interest rate cut amid mounting risks to the economy and expectations that tariffs are likely to have a limited impact on inflation. This keeps the U.S. dollar below a nearly one-month high touched last Thursday and further supports the precious metal.
However, traders seem convinced that the Fed would wait until September. The current market pricing indicates the possibility of two 25 basis point rate cuts by the year’s end. Gold, traditionally viewed as a safe-haven asset, often performs well in low-interest-rate environments.
Data released on Friday showed that U.S. consumer sentiment unexpectedly rose in July, pointing to an increase in optimism among consumers regarding the economic conditions, both current and future.
Read: Oil prices climb to $69.36 as new EU sanctions hit Russian oil supplies
Other precious metals
As gold prices rose, the precious metals market saw upward movement. Spot silver gained 0.08 percent to $38.2, while platinum rose 0.28 percent to $1,425.47. In addition, palladium gained 0.87 percent to $1,251.40.
