Gold prices held steady on Monday (July 28), with gains capped by improved risk sentiment following the trade deal between the United States and the European Union, while investors awaited the US Federal Reserve's policy meeting later this week.

Spot gold was unchanged at $3,335.87 per ounce at 10:35 GMT, after hitting its lowest level since July 17 earlier. US gold futures were unchanged at $3,335.30 per ounce.

Washington reached a trade framework agreement with the European Union in Scotland on Sunday, imposing 15% import tariffs on most EU goods – half the threatened tariffs – and averting a wider trade war.

Risk appetite in broader financial markets improved, with European stocks hitting a four-month high, led by gains in automotive and pharmaceutical stocks.

Meanwhile, talks between the US and China are scheduled in Stockholm on Monday amid expectations of a 90-day extension to the trade truce between the world's two largest economies. "There are two counterbalancing factors keeping gold in balance. The (US-EU) trade deal is weighing on safe-haven demand," said UBS commodities analyst Giovanni Staunovo.

"At the same time, this deal removes some inflation uncertainty for the Fed, ultimately allowing it to cut interest rates later this year, which typically supports gold." The US central bank is expected to maintain its benchmark interest rate in the range of 4.25% to 4.50% after its two-day policy meeting concludes on Wednesday. Markets continue to price in a potential rate cut in September.

US President Donald Trump said on Friday that he had a positive meeting with Fed Chairman Jerome Powell, suggesting the Fed Chairman may be inclined to cut interest rates. Gold tends to perform well in a low interest rate environment.

Elsewhere, spot silver was unchanged at $38.12 an ounce, while platinum rose 0.2% to $1,404.72 and palladium gained 1.2% to $1,234.97. (alg)

Source: Reuters