Gold prices rose on Monday, as a weaker U.S. dollar helped limit the impact of stronger risk appetite following the announcement of a trade agreement between the United States and the European Union.
In Dubai, gold rates rose, with 24-carat gold and 22-carat gold rising a marginal AED0.25 to AED402.5 and AED372.5, respectively. Additionally, 21-carat gold gained AED0.25 to AED357.25, and 18-carat gold was up AED0.5 to AED306.25.
Globally, spot gold gained 0.05 percent to $3,339.93 as of 5:05 GMT, after hitting its lowest level since July 17. Meanwhile, U.S. gold futures rose 0.13 percent to $3,396.67.
U.S. dollar index dips
The United States reached a framework trade agreement with the European Union on Sunday, introducing a 15 percent import tariff on most EU goods, half the originally threatened rate, and averting a broader trade war between the two major economies, which together represent nearly a third of global trade. Despite easing tensions, the deal left several key issues unresolved, including tariffs on spirits.
According to analysts, the agreement reduced transatlantic trade tensions, which in turn weighed on gold prices. However, the resulting softness in the U.S. dollar index helped limit losses for the precious metal by making it more attractive to non-dollar holders.
The U.S. dollar index was down 0.1 percent, making greenback-priced bullion more affordable for overseas buyers. Risk appetite improved following the U.S.-EU trade deal, with European currencies and U.S. stock index futures posting notable gains.
Fed to keep rates steady
Attention now turns to a meeting between senior U.S. and Chinese negotiators in Stockholm later today, where the two sides aim to resolve long-standing trade tensions and potentially extend a truce that has so far prevented additional tariffs.
Analysts noted that gold prices are unlikely to see major price swings in the short term, as investor focus shifts to a crucial week of U.S. economic data and monetary policy developments.
The Federal Reserve is widely expected to keep its benchmark interest rate steady in the 4.25-4.50 percent range when its two-day meeting concludes on Wednesday. Meanwhile, U.S. President Donald Trump said on Friday that he had a constructive meeting with Fed Chair Jerome Powell, hinting that the central bank may be open to future rate cuts.
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Other precious metals
As gold prices recovered some losses, the precious metals market witnessed upward movement on Monday. Spot silver rose 0.16 percent to $38.20, while platinum gained 1.08 percent to $1,416.59. In addition, palladium surged 3.01 percent to $1,256.70 and copper rose 0.29 percent to $5.78.
