Gold prices climbed on Tuesday, reaching their highest level in over a month, buoyed by a weaker U.S. dollar and lower Treasury yields, as investors anticipated progress in trade talks ahead of the August 1 deadline.
In Dubai, gold rates witnessed notable increases, with 24-carat gold rising AED2.75 to AED408.25 and 22-carat gold gaining AED2.50 to AED378.00. In addition, 21-carat gold was up AED2.50 to AED362.50 and 18-carat gold rose AED2.25 to AED310.75.
Spot gold remained steady at $3,390.69 per ounce, as of 02:58 GMT (currently trading above $3,390.50). Earlier in the session, bullion achieved its highest price since June 17. U.S. gold futures held firm at $3,405.20 (currently trading above $3,402.90)
The U.S. dollar index was trading near a more than one-week low against its peers, making gold priced in dollars less expensive for holders of other currencies. Benchmark 10-year U.S. Treasury yields also fell to a more than one-week low on Monday.
A pause in the sell-off of the U.S. dollar (USD) and U.S. Treasury bond yields has also impacted the price of the bright metal.
The future of gold prices largely depends on the performance of the USD, especially in light of U.S. President Donald Trump’s ongoing tariff discussions.
EU explores countermeasures against U.S.
The European Union is exploring a broader set of potential countermeasures against the United States as the chances for a satisfactory trade agreement with Washington diminish, according to EU diplomats.
The recent pullback in gold prices may be linked to profit-taking following Monday’s nearly 1.5 percent rally and in anticipation of key earnings results from America’s tech giant—Alphabet Inc.—this Wednesday.
Increasing uncertainty surrounding U.S. trade agreements with Japan and the European Union (EU) placed significant pressure on the dollar at the start of the week on Monday, reviving concerns about U.S. economic growth. EU diplomats have indicated that the bloc is looking into a wider range of possible countermeasures against the U.S. as doubts about a likely deal continue to rise.
Gold prices closed above the 23.6 percent Fibonacci Retracement (Fibo) level of the April record rally at $3,377. Additionally, the yellow metal is maintaining its position well above all major Simple Moving Averages (SMA), with the 14-day Relative Strength Index (RSI) staying comfortably above the midline, despite the recent decline.
Read more: Dubai 24-carat gold price rises to AED404.75 as market awaits U.S. trade developments
Fed’s meeting could signal rate cut
Moreover, the U.S. currency faced pressure from falling U.S. Treasury bond yields amid ongoing worries regarding the Federal Reserve’s (Fed) independence, especially following Trump’s repeated calls for Fed Chair Jerome Powell’s resignation. The record rally in Wall Street indices has also diminished the safe-haven appeal of the dollar and the attractiveness of its yields, allowing gold prices to extend Friday’s gains.
U.S. President Donald Trump has threatened a 30 percent tariff on imports from Europe if no agreement is reached before the August 1 deadline. Also noteworthy, the European Central Bank is expected to maintain interest rates at 2.0 percent following a series of cuts at the end of its policy meeting on July 24. The U.S. Federal Reserve’s monetary policy meeting is scheduled for next week, with traders pricing in about a 59 percent chance of a rate cut by the Fed in September, according to the CME FedWatch Tool. Gold typically performs well in a low-interest-rate environment.
Spot silver eased 0.2 percent to $38.84 per ounce, platinum increased by 0.8 percent to $1,449.11, and palladium dipped 0.2 percent to $1,262.89.
