The PRICE of GOLD rallied from yesterday's 3-week Dollar lows in London trade Tuesday even as the US currency rose to test 2-month highs on the FX market amid Europe's worsening row over the EU's new trade deal with US President Donald Trump.

 

"It is a dark day when an alliance of free peoples, brought together to affirm their common values and to defend their common interests, resigns itself to submission," said France's Prime Minister Francois Bayrou.

 

Spain will support the deal "without any enthusiasm" said its Prime Minister Pedro Sanchez, but Italy's Prime Minister Giorgia Meloni called the agreement − which triples US import tariffs on European Union goods to 15% − "a positive which ensures stability."

 

While Trump had previously threatened hitting European exports to the US with 30% trade tariffs − and with his tariffs on other nations set to take force Friday − "The only positive aspect is that a further escalation has, for now, been avoided," said the Federation of German Industries (BDI), calling it an "inadequate compromise" that sends a "disastrous signal".

 

Gold priced in the Euro today recovered last week's 0.8% drop, trading back above €2880 per Troy ounce as the 20-nation currency hit 5-week lows against the Dollar.

 

The UK gold price in Pounds per ounce also reversed last week's drop, peaking within £3 of the £2500 mark despite the London Government arranging lower US trade tariffs from Trump at 10%.

 

Dollar-priced gold meanwhile rallied less sharply as the greenback gained on the currency market, reversing only $25 of yesterday's $35 drop to trade at $3327.

 

 

"The past week's news headlines are all tailwinds for the US Dollar," says a note from precious metals strategist Nicky Shiels at Swiss bullion refining and finance group MKS Pamp, "and gold just can't catch a breath."

 

With Trump last week shrugging off his previous calls to fire US Federal Reserve chairman Jerome Powell, "It's unlikely all of the EU-US trade deal is fully priced into gold," Shiels goes on, "and the rhetoric is certainly not" after Trump and von der Leyen talked about "partnership...stability [and] the biggest deal ever made."

 

Asian stock markets fell Tuesday ahead of Friday's start to Trump's latest round of trade tariffs, but European bourses rose, back towards this year's all-time highs, while the UK's FTSE All-Share added 0.4% towards last Thursday's new peak.

 

US trade negotiators today met again with their Chinese counterparts in Stockholm, Sweden to discuss a further 90-day delay to Washington imposing 50% import tariffs on goods from the world's No.1 manufacturing nation.

 

After the European Central Bank last week held its deposit rate at 2.0%, the US Fed is universally expected to hold its target rate at 4.33% at its July policy meeting tomorrow.

 

Market positioning then sees the Fed making two quarter-point cuts by year-end, in line with the US central bank's own end-2025 'dot plot' forecasts since last December.

 

"It is important to reaffirm and preserve the principle of central bank independence," said Pierre-Olivier Gourinchas, chief economist of Washington-based intergovernmental lender the International Monetary Fund, praising "a successful 'soft landing' despite the recent surge in inflation" and upgrading the IMF's global GDP forecast for 2025 from 2.8% to 3.0% annual growth, thanks to a "de-escalation in tariffs" by the White House.

 

US policy remains "highly uncertain" however, and the IMF see risks to growth "firmly on the downside" Gourinchas said.

 

Unlike the gold price, silver was barely moved for a 2nd session running on Tuesday, trading at $38.13 per Troy ounce as platinum again held below $1400 but palladium prices rose back to $1240, a near 2-year high for palladium when suddenly reached in mid-July.