Gold dips as risk appetite improves following US-Japan trade deal 

SINGAPORE: Gold prices eased slightly on Wednesday as investor sentiment improved after US President Donald Trump announced a trade agreement with Japan, easing concerns over impending tariffs. However, a weaker dollar and declining US Treasury yields helped limit further losses in the precious metal. 

Spot gold fell 0.2 per cent to $3,423.44 per ounce as of 0136 GMT, after touching its highest level since June 16 earlier in the session. US gold futures were also down 0.2 per cent at $3,437.70. 

The market responded to Trump’s announcement that the US and Japan had reached a deal which includes a 15 per cent tariff on Japanese imports. The news lifted investor risk appetite, reducing demand for safe-haven assets such as gold. 

US Treasury Secretary Scott Bessent added that US and Chinese officials are expected to meet in Stockholm next week to discuss extending the trade negotiation deadline to August 12. 

Tim Waterer, Chief Market Analyst at CM Trade, noted that further trade agreements ahead of the August 1 deadline could boost broader market confidence and weigh on gold. “But if the US dollar remains under pressure, a return to $3,500 remains a near-term possibility,” he said. 

The news sparked a rally in Asian equity markets, with Japanese shares leading the gains. 

The US dollar index (.DXY) hovered near a two-week low, making gold more affordable for investors holding other currencies. Additionally, benchmark 10-year US Treasury yields dropped to their lowest level since July 9, providing further support to bullion prices. 

In the political sphere, Trump renewed his criticism of Federal Reserve Chair Jerome Powell, calling him a “numbskull” for keeping interest rates high, and predicted he would be removed in eight months. 

Commenting on the market dynamics, Matt Simpson, senior analyst at City Index, said, “With low liquidity, volatility could fade if pressure on Powell subsides. Bears may be waiting to sell if gold dips below $3,500.” 

Among other precious metals, spot silver slipped 0.3 per cent to $39.15 per ounce, platinum dropped 0.3 per cent to $1,437.83, and palladium declined 0.8 per cent to $1,264.96.