Gold Prices Decline Amid Trade Negotiations and Expectations of European Interest Rates Stability

Gold prices witnessed a decline during trading on Tuesday, July 22, amid the prevailing anticipation as the final date for trade negotiations approaches, set for August 1.

The price of gold in spot trading dropped by 0.2% to reach $3386.43 per ounce, after having previously approached its highest level since June 17. Gold futures also recorded a slight decline of 0.1%, settling at $3400.30 per ounce.

These movements come as the European Union is considering a potential package of countermeasures against the United States, according to European diplomats, amidst diminishing prospects of reaching an acceptable trade agreement between the parties.

Kelvin Wong, Chief Market Analyst at OANDA, explained to Reuters: "There is a possibility that the United States and its trading partners may not be able to agree on the proposed terms, which could increase market uncertainty and prompt some participants to resort to hedging strategies in the near future."

In a related context, analysts expect the European Central Bank to maintain interest rates unchanged at 2.0% during its meeting scheduled for July 24, following a series of previous cuts. Investors are also awaiting the Federal Reserve meeting next week, where market expectations indicate a 59% chance of a rate cut during the September meeting, according to the CME FedWatch tool.

It is worth noting that gold typically performs strongly in an environment of declining interest rates, increasing its attractiveness as a safe haven.

Regarding other metals, silver declined by 0.5% to $38.71 per ounce, while platinum rose by 0.3% to reach $1442.55. On the other hand, palladium dropped by 1.3%, marking $1250.19 per ounce.