Gold Prices Retreat Over 1% Amid Trade Negotiation Hopes and Rising Yields

Gold prices declined more than 1% on Tuesday, pressured by renewed optimism over international trade negotiations and rising US Treasury yields, which reduced the appeal of the non-yielding metal, Reuters reports.

As of 11:21 a.m. EDT (15:21 GMT), spot gold was down 1.2%, trading at $3,294.19 per ounce. US gold futures mirrored the decline, slipping 1.2% to $3,303.60.

The retreat in gold came as the US 10-year Treasury yield rose to a more than two-week high, while the US dollar index edged up by 0.2%. Both factors tend to weigh on gold, which does not offer interest and is priced in dollars, making it less attractive when bond yields rise and the dollar strengthens.

Investor sentiment was also buoyed by fresh developments in trade talks. Japan and South Korea announced efforts to negotiate with the United States over newly proposed tariffs set to begin on August 1. President Donald Trump had signaled higher tariffs on 14 nations, but the delayed implementation has opened a window for dialogue, tempering immediate market concerns.

“Focus is on trade as the July 9 deadline nears, with the Trump administration ramping up pressure. But some optimism related to trade deals is fuelling risk-on sentiment, keeping gold subdued,” said Peter Grant, senior metals strategist at Zaner Metals.

Market attention is also turning to the US Federal Reserve, with minutes from its latest policy meeting due on Wednesday. Several Fed officials are scheduled to speak this week, offering potential signals on the future path of interest rates.

“The lingering threat to inflation from tariffs will probably persuade the Fed to hold off cutting interest rates until next year and this will put a lid on gold prices,” said Hamad Hussain, commodities economist at Capital Economics.

Currently, investors are pricing in 50 basis points of rate cuts from the Fed by the end of the year, with expectations for easing beginning in October.

Other precious metals also saw declines. Spot silver dropped 1% to $36.39 per ounce, platinum fell 1.8% to $1,345.53, and palladium eased 1.3% to $1,097.25.