Gold extends losses
Spot gold was down 0.7% at $3,362.48 per ounce by 1207 GMT, after shedding 1.3% in the previous session. US gold futures dropped 0.9% to $3,366.40. Following this week's trade deal between the US and Japan, two European diplomats said on Wednesday the European Union and the US are also edging toward a trade deal that could include a 15% US baseline tariff on EU goods and exemptions.
'Gold is down this morning due to the positive news flow around global trade... this is reducing downside risks for global growth and supports the prevailing risk-on mood in financial markets,' said Carsten Menke, an analyst at Julius Baer.
The trade expectations meanwhile drove risk sentiment in the global financial markets, propelling stocks to fresh record highs. 'Demand from safe-haven seekers has cooled while central bank buying stays sound, even though not as strong as earlier in the year. We still expect gold to move higher in the longer term,' Menke said.
The Fed's policy meeting, scheduled for July 29-30, is expected to maintain interest rates within their current range. Investors anticipate the central bank will resume rate cuts in September. Elsewhere, the European Central Bank is also expected to keep interest rates steady on Thursday.
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