Gold prices rose on Tuesday (July 29th) as initial euphoria over the US-EU trade truce subsided, while investors awaited the upcoming Federal Reserve policy meeting for clarity on the direction of US interest rates.

Spot gold prices rose 0.4% to $3,327.30 per ounce, as of 08:27 GMT. Bullion hit its lowest level since July 9th on Monday. US gold futures rose 0.5% to $3,325.40. "We see market sentiment starting to improve after some trade deals, but there are still some hurdles to overcome," said Ricardo Evangelista, senior analyst at brokerage firm ActivTrades.

"If the US and China fail to reach a deal and there is no deadline extension, then we could see risk-offs return and we could see the return of global economic uncertainty dominating investor sentiment." The European Union and the United States announced a tariff deal on Sunday that will see most EU exports subject to 15% tariffs, nearly three months after the UK locked in a base rate of 10%.

However, investors are weighing the downside of the US-EU trade deal and the fact that burdensome tariffs will remain in place, with unintended implications for growth and inflation.

Gold is often used as a safe store of value during times of political and financial uncertainty. Top US and Chinese economic officials met in Stockholm on Monday for more than five hours of talks aimed at resolving a long-running economic dispute amid the trade war between the world's two largest economies, with the aim of extending the truce for three months.

Focus now shifts to the US central bank's two-day policy meeting starting later, with expectations that interest rates will be held steady, but traders will be closely watching comments to gauge the timing of the Fed's next rate cut.

Spot silver was steady at $38.18 per ounce, while platinum fell 0.6% to $1,382.10 and palladium weakened 0.4% to $1,241. (alg)

Source: Reuters