Gold Stumbles as Dollar Demand and Trade Deal Reshape Markets

A Fourth Day of Losses for Gold

Gold prices slid for the fourth consecutive day on July 28, 2025, dropping 0.68% to $3,314.45 per troy ounce, down from a daily high of $3,345.52 and a previous close of $3,337.07. The decline reflects a resurgent US dollar, bolstered by a landmark US-EU trade agreement that has calmed global markets and reduced demand for safe-haven assets like gold. With the US Dollar Index climbing nearly 1% to 98.64 and US 10-year Treasury yields rising to 4.41%, gold faces mounting pressure. Investors are now bracing for a packed week of US economic data and a critical Federal Reserve decision, which could further shape the precious metal’s trajectory.

US-EU Trade Deal Boosts Dollar Demand

A pivotal trade agreement between the United States and the European Union, finalized over the weekend, has shifted market dynamics. The deal slashed proposed tariffs on EU goods from 30% to 15%, securing $750 billion in EU purchases of US liquefied natural gas and $600 billion in investments in American industries like clean energy and defense. This breakthrough has eased fears of a trade war, lifting investor confidence and fueling demand for the US dollar. However, the agreement has drawn criticism in Europe, with some leaders arguing it disproportionately favors US interests, potentially straining European exporters in sectors like automotive and pharmaceuticals. The deal’s impact has weakened safe-haven assets, pushing gold below the key $3,335 level.

Rising Yields and Dollar Strength Weigh on Gold

The strengthening US dollar and rising Treasury yields are creating a challenging environment for gold. The US 10-year note yield edged up to 4.41%, while real yields climbed to 1.974%, making non-yielding assets like gold less attractive. The US Dollar Index’s 0.99% surge underscores broad demand for the greenback, driven by optimism over the trade deal and expectations of steady Federal Reserve policy. Despite recent trade progress with partners like Japan and the UK, unresolved negotiations with Canada and Mexico—key US trading partners—suggest lingering uncertainties that could keep some investors cautious, potentially limiting gold’s further decline.

Federal Reserve and Economic Data in Focus

All eyes are on the Federal Reserve’s July 29-30 meeting, where rates are expected to remain at 4.25%-4.50%, supported by persistent 3.2% inflation and a robust labor market. Investors anticipate a 63% chance of a 25-basis-point rate cut in September, but attention will focus on Chair Jerome Powell’s press conference for hints about future policy. This week’s economic calendar is packed with critical releases, including second-quarter GDP, nonfarm payrolls, the ISM Manufacturing PMI, and the Core PCE Price Index, the Fed’s preferred inflation gauge. These data points could either reinforce gold’s bearish trend or spark renewed interest if economic cracks emerge.

What’s Next for Gold Prices?

Gold’s outlook remains uncertain as it hovers near the critical $3,300 level, having dipped below the 50-day moving average of $3,335. Technical indicators suggest the downtrend may persist, with the Relative Strength Index signaling bearish momentum. If prices fall further, the next support lies near $3,244, where the 100-day moving average and June 30 lows converge. On the upside, a break above $3,350 could pave the way to $3,400 or even the June peak of $3,452. Despite short-term pressures, forecasts project gold averaging $3,320 in 2025 and $3,400 in 2026, driven by long-term demand from central banks and inflation concerns. For now, investors weigh trade-driven optimism against looming economic data, keeping gold on a tightrope.