Gold Hits Highest Level in Over a Month as Dollar and Bond Yields Decline
Gold prices climbed to their highest levels in more than a month on Tuesday, supported by a weaker U.S. dollar and declining U.S. Treasury yields. The market remains on edge ahead of the looming August 1 deadline for U.S.-EU trade negotiations.
As of 05:03 GMT, spot gold held steady at $3,389.98 per ounce after earlier reaching its highest point since June 17. U.S. gold futures were also flat at $3,402.90 per ounce.
The upward momentum in gold was largely driven by a softening U.S. dollar, with the dollar index falling near its lowest level in more than a week against a basket of major currencies. This shift has made dollar-priced gold more attractive to holders of other currencies.
At the same time, yields on 10-year U.S. Treasury bonds dropped to their lowest levels in over a week during Monday’s session, further bolstering demand for safe-haven assets like gold.
Tensions surrounding trade talks between the United States and the European Union have heightened uncertainty in global markets. The risk of no agreement by the deadline has increased, especially amid the threat of 30% tariffs on European imports proposed by the U.S. administration.
In the monetary policy arena, the European Central Bank is expected to keep interest rates unchanged at 2% during its upcoming meeting on July 24, following a series of easing measures in recent months. Meanwhile, attention is also turning to next week’s U.S. Federal Reserve meeting. Market expectations currently estimate a 59% probability of a rate cut in September, according to CME’s FedWatch tool.
Gold tends to perform well in low-interest rate environments, as it reduces the opportunity cost of holding non-yielding assets.
In other precious metals, spot silver fell 0.5% to $38.71 per ounce. Platinum edged up 0.3% to $1,442.55, while palladium declined by 1.3% to $1,250.19 per ounce.
