U.S.-EU Trade Progress Drives Gold Prices Down 5%

Recent progress in U.S.-EU trade negotiations has led to a decrease in market risk aversion, which has in turn weakened the demand for safe-haven assets like gold. This shift has resulted in a sustained downward trend in gold prices, which have been trading around 3,347 dollars per ounce. The easing of trade tensions between the U.S. and EU, following statements from the EU that it would expedite negotiations to avoid a transatlantic trade war, has contributed to this trend. Both sides have shown a more conciliatory attitude after U.S. President Trump's earlier accusations of EU stalling on negotiations.

The progress in trade talks between the White House and some of its partners has continued to put pressure on the demand for safe-haven assets like gold. Since reaching a more than one-year high in mid-April, gold ETFs have seen a net outflow of funds for five consecutive weeks. However, the market remains cautious, weighing multiple risk factors, including the expanding U.S. fiscal deficit, ongoing trade negotiations, and escalating geopolitical tensions in the Middle East and Ukraine.

Despite the current gold price being approximately 165 dollars lower than its historical high reached last month, the year-to-date increase still exceeds 25%. Citibank has revised its short-term gold price forecast, predicting it could reach 3,500 dollars per ounce, emphasizing gold's enduring safe-haven status amidst new trade and geopolitical risks. Investors are closely monitoring the upcoming release of the U.S. core PCE price index on Friday, a key inflation indicator for the Federal Reserve.

As of the latest update, spot gold prices have remained relatively stable at around 3,345.25 dollars per ounce. The dollar index has also shown minimal movement. Platinum prices have continued their downward trend, despite reaching a two-year high last week due to supply constraints. Silver prices have seen a slight decline, while palladium prices have remained largely unchanged.