Gold rose to a five-week high on Tuesday (July 22nd), driven by trade uncertainty and weakening US bond yields as investors continued to monitor US President Donald Trump's tariff deadline on August 1st.

Spot gold prices rose 1% to $3,427.59 an ounce at 16:22 GMT, reaching their highest level since June 16th. US gold futures rose 1.2% to $3,442.50. The yield on the benchmark 10-year US Treasury note fell to a nearly two-week low, making non-yielding bullion more attractive.

"Trade uncertainty is driving demand for safe-haven assets. The US is working on several trade deals, and there are rumors that the EU and the US may not be able to reach a deal or are not even close to one," said Jim Wyckoff, senior analyst at Kitco Metals.

Treasury Secretary Scott Bessent said Tuesday he would meet with his Chinese counterpart next week, hinting at a possible extension of the August 12 tariff deadline. He added that the US is ready to announce a "series of trade deals" with other countries.

Meanwhile, European Union diplomats have hinted that the EU is considering broader retaliatory measures against the US as the prospects for a trade agreement fade.

"Gold is likely to remain bullish. Strong resistance is seen near $3,420. On the other hand, $3,350 is a support level," said Jigar Trivedi, senior commodity analyst at Reliance Securities. Investors are also positioning themselves ahead of next week's Federal Reserve meeting. Although the Fed is expected to keep interest rates unchanged, the market is eyeing a potential rate cut in October.

Gold, traditionally considered a hedge during times of uncertainty, also tends to perform well in a low-interest-rate environment. Bessent also said Tuesday that Fed Chairman Jerome Powell does not need to step down immediately, a day after calling for a review of the central bank as an institution. Meanwhile, Fed Vice Chair Michelle Bowman underscored the importance of central bank independence amid increasing pressure from Trump to lower borrowing costs.

Spot silver rose 0.7% to $39.21 an ounce, platinum fell 0.1% to $1,437.60, and palladium rose 1% to $1,278.05. (alg)

Source: Reuters