Gold prices edged lower on Friday morning as renewed optimism over trade negotiations between the United States and key partners, including the European Union, diminished bullion’s traditional appeal as a safe-haven asset.
Gold futures were down 0.5% to $3,356.10 per ounce, at the time of writing, while spot gold lost 0.3% to $3,360.13 per ounce.
“Basically we are seeing some profit-taking from short-term bullish speculators due to the fact that we now start to see this trade-deal optimism in the market,” OANDA senior market analyst Kelvin Wong said.
Investor appetite for riskier assets increased following reports that Washington and Brussels were moving closer to a trade agreement. The deal under discussion could include a baseline 15% US tariff on EU goods, with certain exemptions. The development follows the recent unveiling of a separate trade agreement between the US and Japan.
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Despite the downward pressure, Wong noted that certain macroeconomic factors continued to lend support to the precious metal. “The dollar is in a weakening bias and on top of that, we still have the Fed rate cuts pretty much alive at this juncture, which are supporting gold near $3,360 level,” he said.
In a surprise move, US president Donald Trump is expected to visit the Federal Reserve later on Friday, adding an element of uncertainty to the US policy outlook. The visit comes amid his repeated criticism of Fed chair Jerome Powell for not easing interest rates more aggressively.
The Fed is widely anticipated to keep interest rates on hold at its 29–30 July meeting. However, markets continue to price in the possibility of a rate cut as early as September.
Gold, often sought as a hedge during periods of economic uncertainty, tends to perform well in a low-interest rate environment.
Oil prices gained on Friday, buoyed by renewed optimism over US trade talks, which outweighed concerns over an expected uptick in Venezuelan crude supply.
Brent (BZ=F) crude futures gained 0.7% to trade at $68.88 per barrel, at the time of writing, while West Texas Intermediate (CL=F) futures climbed by 0.8% to $66.55 a barrel.
The prospect of further trade agreements between the US and its global partners, just days ahead of the 1 August deadline for a new wave of tariffs, helped support sentiment in the oil market.
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“This has raised hopes that the US will soon reach a deal with the European Union as well, before the tariff deadline which expires in just over a week’s time,” David Morrison, senior market analyst at Trade Nation said.
