Gold prices declined in the European market on Monday, deepening losses for the fourth consecutive day and recording their lowest level in two weeks. The drop was driven by a slowdown in safe-haven demand amid prevailing positive sentiment in global markets, in addition to the rising US dollar in the foreign exchange market.

The United States and the European Union reached a major trade agreement ahead of the August 1 deadline, and intensive trade negotiations are set to begin later today between Washington and Beijing in the Swedish capital, Stockholm.

The Federal Reserve’s monetary policy meeting kicks off tomorrow, Tuesday, with decisions to be announced on Wednesday. Expectations point to interest rates remaining unchanged for the fourth consecutive meeting.

The Price

• Gold prices today: Gold declined by 0.4% to $3,323.84, down from the opening price of $3,337.62, after hitting a session high of $3,345.37.

• At Friday’s close, gold prices lost 0.9%, marking a third straight daily loss, under pressure from the rising US dollar.

• Over the past week, gold fell 0.4%, posting a second consecutive weekly loss due to correction and profit-taking from the five-week high of $3,438.94 per ounce.

Positive Trade Developments

The United States signed a framework trade agreement with the European Union on Sunday, imposing a 15% tariff on most European goods — half the rate previously threatened by Trump as of August 1. This move helped avert a broader trade war between the two allies, who together account for nearly one-third of global trade.

Senior US and Chinese negotiators are scheduled to meet in Stockholm on Monday to extend the current trade truce and prevent sharp tariff increases.

The US Dollar

The US Dollar Index rose by 0.5% on Monday, extending its gains for the third consecutive session, reflecting continued strength in the greenback against a basket of major and minor currencies.

This rally comes as concerns over a US economic slowdown eased following recent trade agreements with Japan and the EU, along with strong economic data suggesting the Federal Reserve may delay resuming interest rate cuts.

Federal Reserve

The Federal Reserve’s crucial monetary policy meeting begins tomorrow, Tuesday, with decisions expected on Wednesday. Projections point to no change in US interest rates — marking the fifth straight meeting with stable rates.

The policy statement and comments from Fed Chair Jerome Powell are expected to provide clear and strong signals regarding the future of interest rates in the United States for the remainder of the year.

US Interest Rates

• According to the CME Group’s FedWatch Tool: The probability of a 25 basis point rate cut at the July meeting is currently priced at 3%, while the probability of holding rates steady is at 97%.

• The probability of a 25 basis point rate cut in September is currently priced at 62%, with a 38% chance of rates remaining unchanged.

Gold Outlook

• Reliance Securities senior analyst Jigar Trivedi said the agreement eased transatlantic trade tensions, putting pressure on gold.

• Trivedi added: In the short term, we do not expect significant or sharp fluctuations in gold prices, as investor focus shifts to a pivotal week for US monetary policy and economic data.

SPDR Fund

Gold holdings at the SPDR Gold Trust — the world’s largest gold-backed ETF — remained unchanged on Friday, keeping total holdings at 957.09 metric tons, the highest level since June 23.

The euro rose in the European market on Monday at the start of the week’s trading against a basket of global currencies, resuming its gains that had stalled for two days against the US dollar, and once again approaching a two-week high, supported by the trade agreement between the European Union and the United States.

Following a hawkish meeting by the European Central Bank last week, expectations for a rate cut in September have declined. To reprice those expectations, investors are now awaiting the release of several key economic indicators from Europe — especially July inflation data.

The Price

• EUR/USD today: The euro rose against the dollar by 0.25% to $1.1770, up from Friday’s closing price of $1.1741, and recorded the lowest level during today’s session at $1.1748.

• On Friday, the euro ended the session down by less than 0.1% against the dollar, marking a second consecutive daily loss due to continued correction and profit-taking from the two-week high at $1.1775.

• Last week, the euro gained 1.0% against the dollar, posting its first weekly gain in the past three weeks, supported by the European Central Bank’s monetary policy meeting.

Trade Agreement Between the EU and the US

During their meeting in Scotland on Sunday, US President Donald Trump and European Commission President Ursula von der Leyen announced a new trade deal that includes the following:

• The agreement imposes US tariffs on imports from Europe — including cars, pharmaceuticals, and semiconductors — at a rate of 15% starting August 1.

• A selected group of American goods will be fully exempt from European tariffs under a “no-reciprocity” framework, including: aircraft parts, semiconductor equipment, some generic pharmaceuticals, chemicals, and strategic agricultural products.

• Tariffs on steel and aluminum will remain at 50% for now, with both sides agreeing on the potential to replace them later with a quota system.

• The EU committed to injecting up to $600 billion in investments into the US economy during Trump’s second term.

• The EU also committed to purchasing about $750 billion in US energy products — including liquefied natural gas and nuclear coal — over three years.

• Trump stated that the agreement aims to reduce the US trade deficit with the EU, which reached $235.6 billion in 2024.

• Von der Leyen described the deal as providing “stability and predictability” for both sides, with a focus on “rebalancing” the trade relationship.

European Interest Rates

• Last week, the European Central Bank kept its main interest rates unchanged at 2.15% — the lowest level since October 2022 — after having cut rates in the previous meeting for the seventh time in a row.

• The ECB preferred to pause its monetary easing in anticipation of clarity regarding future US trade relations.

• ECB President Christine Lagarde said after the monetary policy meeting: “We are in a waiting mode.” She added that the eurozone economy has shown resilience despite global economic uncertainty.

• According to Reuters sources, a clear majority in the ECB meeting expressed preference for keeping interest rates unchanged in September, marking a second consecutive meeting with this stance.

• Money market pricing for a 25-basis-point ECB rate cut in September has declined from 50% to below 30%.

• To reprice those expectations, investors in the coming period will closely monitor various economic indicators from Europe, in addition to statements by ECB officials.

The Japanese yen declined in the Asian market on Monday against a basket of major and minor currencies, extending its losses for the third consecutive day against the US dollar. This comes amid positive global trade developments that have improved risk appetite in markets and reduced demand for safe-haven assets.

The Bank of Japan is scheduled to meet this week to discuss appropriate monetary policy in light of recent economic developments in the country, with the probability of a 25-basis-point interest rate hike currently below 20%.

The Price

• USD/JPY today: The dollar rose against the yen by 0.25% to ¥148.02, up from Friday’s closing price of ¥147.65, recording the lowest level during today’s session at ¥147.51.

• The yen lost 0.45% against the dollar at Friday’s settlement, marking a second consecutive daily loss, due to continued correction and profit-taking from a two-week high at ¥145.85.

• Last week, the yen gained 0.75% against the dollar, its first weekly gain in the past three weeks, amid political uncertainty in Japan following the ruling party’s defeat in the upper house elections.

Positive Trade Developments

During their meeting in Scotland on Sunday, US President Donald Trump and European Commission President Ursula von der Leyen announced a new trade deal that includes a 15% tariff on European Union goods — half the rate Trump had threatened to impose starting August 1.

Senior US and Chinese negotiators are scheduled to meet in Stockholm on Monday to discuss extending the trade truce and preventing sharp increases in tariffs.

Bank of Japan

• The Bank of Japan will hold its meeting on Wednesday and Thursday this week to discuss the appropriate monetary policy for the world's third-largest economy.

• The market currently prices in a roughly 20% chance of a 25-basis-point rate hike during this meeting.

• Bank of Japan Governor Kazuo Ueda previously stated: the economy and prices are facing strong downward pressures, and the Bank of Japan has limited room to support growth by cutting interest rates, with the short-term interest rate remaining at 0.5%.

Wheat futures declined on the Chicago Board of Trade during Friday trading, ending the week down by 1.1%, as abundant global supply stemming from ongoing harvests in the Northern Hemisphere overshadowed the strength of US exports.

Corn futures also fell after US export sales triggered a round of short-covering in the previous session, recording a weekly loss of 1.7% amid expectations of a bountiful harvest in the United States.

Soybeans also declined by 1.3% during the week, after US weekly export sales came in at the lower end of trade estimates.

Strong US wheat sales

Net US wheat export sales for the week ending July 17 totaled 712,000 metric tons, a figure at the high end of trade estimate ranges.

US wheat is now cheaper than European or Russian wheat (the latter having started to flow into the market from its major harvest), noting that CBOT wheat prices fell in May to their lowest level in five years at 5.06¼ dollars per bushel.

In the same context, participants in the annual crop tour of North Dakota expected the average yield of spring red hard wheat in the top-producing state to reach about 49.0 bushels per acre, which is a drop from the record 54.5 bushels reported last year.

However, those figures remain above the five-year average, according to Rabobank analyst Vitor Pistoua, who added: “There are still strong crops coming from that region.”

Pistoua noted that as the Northern Hemisphere harvest season progresses, it is "unlikely that supply expectations will change," pointing out that abundant corn supply and low prices are also putting pressure on the wheat market.

He said: “Nobody is expecting a price increase.”

Corn and soybean exports

As for corn, the US Department of Agriculture (USDA) announced on Thursday export sales of 135,000 tons to South Korea and 284,196 tons to unknown destinations.

Soybeans came under additional pressure from weakness in the soymeal market on Thursday, following reports that Chinese buyers purchased additional volumes of Argentine soymeal, although prices regained some strength on Friday.

Corn

In trading, corn futures for December delivery ended the session down by 0.4% at $4.19 per bushel.

Soybeans

Soybean futures for November delivery fell by 0.2% to $10.21 per bushel.

Wheat

Wheat futures for September delivery settled down by 0.4% at $5.38 per bushel.