Gold price steadies as US trade deals dent safe-haven demand

Easing geopolitical uncertainty and signs of progress in US-led trade negotiations reduced investor demand for safe-haven assets. On Thursday, gold prices steadied after a sharp decline. Amid optimism surrounding US trade deals with Japan and potentially the European Union, the metal had dropped 1.3 per cent in the previous session.

Meanwhile, spot gold hovered near $3,389.77 an ounce at 8:24 a.m. in Singapore, up 0.1 per cent on the day, as per Bloomberg. Meanwhile, the Bloomberg Dollar Spot Index remained steady, though the dollar has fallen more than 1 per cent this week, providing some support to non-yielding assets like gold.

Trade deals impact on gold’s shine

Gold’s retreat comes after Bloomberg News reported that the European Union may be ready to accept a 15 per cent US tariff on most of its goods. This follows a similar deal with Japan, which included a $550 billion investment commitment into the US economy. The agreements are being viewed as diplomatic victories for President Donald Trump’s administration and a step toward stabilising global trade relations.

“Progress in talks between the US and key trading partners hurt demand for haven assets,” Bloomberg noted in its report. The market is also digesting Trump’s warnings of additional tariffs, between 15 and 50 per cent, on countries such as South Korea and India, should they fail to reach trade deals before the August 1 deadline. While these threats cast some shadow, the broader tone remains optimistic, dampening the flight to safety that has boosted gold prices for much of the year.

Yields rise, gold loses appeal

Following the trade development, US Treasury yields rose for the first time in six days, further weighing on bullion. Since gold does not generate interest, it typically underperforms when yields rise, as investors shift to income-generating assets.

Meanwhile, traders are closely watching the Federal Reserve’s July policy meeting. According to Bloomberg, money markets currently expect the Fed to keep interest rates steady next week, though a rate cut remains likely before October. There’s a 60 per cent probability of a quarter-point reduction at the September meeting. Lower rates typically support gold, as they reduce the opportunity cost of holding the metal, as per Bloomberg.

Bullion rally may be cooling

Gold prices have surged nearly 30 per cent so far in 2025, fuelled by global trade tensions, Russia’s invasion of Ukraine, and West Asia instability. The metal hit an all-time high of over $3,500 an ounce in April but has since been trading within a narrow band as markets await clearer signals on monetary policy and geopolitics.

Still, the recent pullback may indicate that bullish momentum is starting to wane in the absence of fresh catalysts.

Silver and other metals diverge

While gold remained range-bound, silver continued to attract interest, especially from industrial buyers. The white metal steadied after briefly touching its highest level since 2011 earlier this week. According to Bloomberg, its demand is surging due to its widespread use in clean-energy technologies, including solar panels.

Moreover, silver’s borrowing costs have risen above historical norms, signalling a supply squeeze. Growing holdings in exchange-traded funds have also reduced the amount of freely available metal in the market. Elsewhere, platinum prices rose modestly, while palladium extended losses.

(With inputs from the agencies)