Gold eases as US-Japan trade deal lifts risk appetite, but weak dollar caps losses
Spot gold was down 0.2% at $3,423.44 per ounce, as of 0136 GMT, after hitting its highest point since June 16 earlier in the session. U.S. gold futures also slipped 0.2% to $3,437.70.
Trump said the U.S. and Japan had struck a trade deal that includes a 15% tariff that will be levied on U.S. imports from the country.
U.S. and Chinese officials will meet in Stockholm next week to discuss an extension to the deadline to August 12 for negotiating a trade deal, U.S. Treasury Secretary Scott Bessent said.
"If further trade deals are signed ahead of August 1, this could further boost general risk appetite and reduce the demand for gold," CM Trade Chief Market Analyst Tim Waterer said.
"But if the USD remains pressured this will keep a return to $3,500 a viable near-term prospect for the precious metal."
Japanese shares led an Asian share market rally on Wednesday after Trump announced Japan trade deal.
Offering support to bullion, the U.S. dollar index (.DXY), opens new tab languished near a two-week low against its rivals, making greenback-priced gold less expensive for other currency holders.
Benchmark 10-year U.S. Treasury yields on Tuesday touched their lowest level since July 9.
Meanwhile, Trump continued his attack on U.S. Federal Reserve Chair Jerome Powell, calling him a "numbskull" who has kept interest rates too high and said he will be out in eight months.
"These are low-liquidity conditions and that could just easily see volatility recede should the pressure on Powell's firing ease. Bears may therefore be lurking to fade into moves below $3,500," said Matt Simpson, a senior analyst at City Index.
Elsewhere, spot silver fell 0.3% to $39.15 per ounce, platinum dropped 0.3% to $1,437.83 and palladium slipped 0.8% to $1,264.96.
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28 minutes ago
- Reuters
Risk boost from US-EU trade deal of little help to rupee as outflows persist
MUMBAI, July 28 (Reuters) - The Indian rupee is expected to open little changed on Monday, with any support from improved risk sentiment after a trade deal between the European Union (EU) and the U.S. likely to be capped by persistent foreign portfolio outflows. The 1-month non-deliverable forward indicated the rupee will open in the 86.48-86.51 range versus the U.S. dollar, compared with Friday's close of 86.5150. Global stocks rose and the euro firmed after the weekend deal between the EU and the U.S., which set the import tariff on most EU goods at 15% - half the rate initially threatened. Asian currencies traded mixed, while the dollar index was at 97.6. The U.S.-EU trade pact is expected to reduce trade-related uncertainty in a week dominated by central bank policy decisions and the U.S.'s August 1 deadline for trading partners to strike deals. Washington has already signed similar framework accords with Britain, Japan, Indonesia and Vietnam. Meanwhile, India's trade minister told Reuters last week that the country is also hopeful of reaching a deal with the U.S. that includes "special and preferred treatment". Alongside these, monetary policy meetings in the U.S., Japan and other economies will be in focus this week. While the Federal Reserve is widely expected to keep rates unchanged, ANZ said it will watch for "tweaks to the language" in the Fed's statement and Chair Jerome Powell's comments for clues on possible rate cuts in September. Over the week, traders expect the rupee to hover between 86.20 and 86.80-86.90, with a slight depreciation bias given the persistent outflows from local stocks. Foreign investors have net sold Indian equities worth about $750 million so far in July, reversing three months of inflows. KEY INDICATORS: ** One-month non-deliverable rupee forward at 86.63; onshore one-month forward premium at 13.25 paise ** Dollar index at 97.67 ** Brent crude futures up 0.4% at $68.7 per barrel ** Ten-year U.S. note yield at 4.39% ** As per NSDL data, foreign investors sold a net $231.1mln worth of Indian shares on July 24 ** NSDL data shows foreign investors sold a net $55.2mln worth of Indian bonds on July 24
Reuters
28 minutes ago
- Reuters
EU's pledge for $250 billion of US energy imports is delusional
LAUNCESTON, Australia, July 28 (Reuters) - There are strong echoes of Donald Trump's failed trade deal with China from his first term as U.S. president in the framework agreement reached with the European Union. Trump and EU Commission President Ursula von der Leyen announced the deal for a 15% tariff on U.S. imports of EU goods at the U.S. leader's golf course in Scotland on Sunday. But more important than the 15% tariff rate was the apparent commitment by the EU to massively ramp up energy imports from the United States. The agreement calls for EU imports of U.S. energy, which currently are mainly crude oil and liquefied natural gas (LNG), of $250 billion a year for three years. This is a delusional level of imports that the EU has virtually no chance of meeting, and one that U.S. producers would also struggle to supply. Even if the EU did manage somehow to boost its energy imports from the United States to the $250 billion a year mark, it would also prove massively disruptive for energy flows around the rest of the world. The numbers show the scale of the challenge. The 28 members of the EU imported 3.38 billion barrels of seaborne crude oil in 2024, according to data compiled by energy analysts Kpler. Assuming the 2025 volume stays the same and the price paid per barrel averages around $70, this means the EU will pay about $236.6 billion for its crude. The EU's imports from the United States were 573 million barrels in 2024, which if replicated this year would be valued at around $40.1 billion. For LNG, the EU imported 82.68 million metric tons in 2024, which would have cost around $51.26 billion assuming an average price of around $12 per million British thermal units (mmBtu). Imports of the super-chilled fuel from the United States were 35.13 million tons in 2024, worth about $21.78 billion. The EU also buys coal from the United States, the bulk being higher-value metallurgical coal used to make steel. Total EU imports of metallurgical coal in 2024 were worth $6.72 billion, assuming an average price of $200 per ton, with those from the United States valued at $2.67 billion. Putting together the value of EU imports of U.S. crude oil, LNG and metallurgical coal gives a 2024 total of around $64.55 billion. This is about 26% of the $250 billion the EU is supposed to spend on U.S. energy a year under the framework agreement. If the EU did ramp up its imports of U.S. crude, LNG and metallurgical coal to $250 billion, it would account for 85% of its total spending on those energy commodities. The United States exported 1.45 billion barrels of crude in 2024, according to Kpler, which would be worth $101.5 billion at a price of $70 a barrel. U.S. shipments of LNG were 87.05 million tons in 2024, which would be worth about $54 billion at an average price of $12 per mmBtu. The U.S. exported 51.53 million tons of metallurgical coal in 2024, worth $10.3 billion at an average price of $200 a ton. Putting together the value of all three energy commodities gives a total of $165.8 billion, meaning that even if the EU bought the entire volume it would still fall well short of the $250 billion. The scale of the delusion probably exceeds what Trump and China agreed in their so-called Phase 1 trade deal in December 2019, under which China was supposed to buy $200 billion of additional U.S. energy by the end of 2021. The reality is that China never even came close to buying that level, and its imports of U.S. energy didn't even reach what they were before Trump launched his first trade war in 2017. There are a few caveats when looking at the framework agreement between Trump and Von der Leyen. The first is that not all the details are known and the $250 billion of energy is also said to include nuclear fuel, although this will only be a small value even if included. The second is the deal will probably include refined fuels, with U.S. exports to the EU of products such as diesel, being almost 110 million barrels in 2024, worth about $10.9 billion assuming a price of $100 a barrel. But it's still clear that the commitment to buy $250 billion in U.S. energy is completely unrealistic and unachievable. The smart people in the room must know this, begging the question as to why agree to what is obviously a ridiculous number? What happens when the inevitable failure is realised? Perhaps the EU is hoping for the same outcome as China did with the first trade war with Trump in 2019. Run down the clock, talk nice, and hope the next U.S. president is easier to deal with. Enjoying this column? Check out Reuters Open Interest (ROI), your essential new source for global financial commentary. ROI delivers thought-provoking, data-driven analysis of everything from swap rates to soybeans. Markets are moving faster than ever. ROI can help you keep up. Follow ROI on LinkedIn, opens new tab and X, opens new tab. The views expressed here are those of the author, a columnist for Reuters.
Reuters
28 minutes ago
- Reuters
India's equity benchmarks set to open near one-month low
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