Gold prices rise supported by the decline of the dollar despite a trade agreement between Washington and the European Union
Gold prices saw a significant rise on Monday to the levels of 3,345 dollars per ounce, supported by the decline in the value of the dollar, which helped offset the pressure caused by the improvement in market sentiment after the announcement of a framework trade agreement between the United States and the European Union.
Trade deal eases tensions but leaves files stuck
The United States and the European Union announced on Sunday a trade agreement under which tariffs of 15% will be imposed on most European goods, which is half the rate that Washington had previously threatened to impose.
This agreement helped to avoid a wider trade escalation between the two parties, which together account for about a third of global trade, but some fundamental issues remained unresolved, which keeps uncertainty in the markets.
Dollar weakness supports gold despite risk improvement
Although the trade agreement eased tensions and gave a boost to risk markets, the dollar's decline provided support for gold prices, preventing a further collapse of the precious metal.
But analysts expect gold to return to its downward trajectory during the current week, especially as the flow of economic and political news continues.
US-China negotiations under the microscope
Top negotiators from the United States and China are due to meet in Stockholm to discuss economic differences between the two countries, in an attempt to extend the current trade truce that prevented the imposition of further tariffs.
The monetary policy of the Federal Reserve under the spotlight
Investors attention is currently turning towards the Federal Reserve meeting scheduled for Wednesday, where the US central bank is expected to keep interest rates at the current range between 4.25% and 4.50%
the market will focus on any hints of a possible cut in interest rates next September, especially after President Trump's repeated criticism of the central bank's policy.
The head of the Federal Reserve, Jerome Powell, has emphasized a wait-and-see approach, without indicating any imminent monetary easing.
The sudden meeting between Trump and Powell also added some political excitement, but did not radically change market expectations.
Key economic data may move the markets
Along with the Fed's decision, the markets will be watching a series of important economic data this week, the most notable of which are:
- Job opportunities report (JOLTS)
- Private sector employment index (ADP)
- Non-agricultural jobs (NFP)
- The Personal Consumption Expenditures price index (PCE), which is the Fed's preferred measure of inflation.
