Gold Declines as Optimism Around Trade Deals Supports Markets
Gold (XAU/USD) declined towards $3,360 today, extending its two-day decline as easing trade tensions and a rebound in investor risk appetite reduced demand for safe-haven assets. Investors are closely watching tariff negotiations, with reports suggesting that the U.S. and EU are close to finalising a trade deal, following Washington’s recent agreement with Japan.
On the economic front, U.S. jobless claims fell for the sixth consecutive week, marking the longest decline since 2022. This sign of labour market resilience reinforced expectations that the Federal Reserve (Fed) will keep interest rates unchanged at next week’s policy meeting.
Markets have adjusted their outlook, pricing in fewer than two rate cuts this year, with the first one expected in October. The shift reflects growing confidence in the U.S. economy’s resilience and a more cautious Fed stance on monetary policy easing.
Meanwhile, investors noted renewed tension between U.S. President Donald Trump and Fed Chair Jerome Powell as they clashed over the central bank’s renovation costs. Although Trump reiterated his call for lower rates, he clarified that disagreements over renovation costs alone weren’t sufficient grounds for firing Powell.
EUR/USD traded near 1.17500 on Thursday, slightly below its highest level since August 2021, after the European Central Bank (ECB) left interest rates unchanged. The decision came amid rising uncertainty, particularly around EU-U.S. trade negotiations ahead of the 1 August deadline.
The ECB left its deposit rate at 2% on Thursday, aligning with market expectations. The regulator noted that the eurozone economy was resilience but warned that the outlook remains ‘exceptionally uncertain’, primarily due to persistent trade tensions. While another rate cut remains possible, markets are now less confident it will occur by year-end. Following the decision, eurozone bond yields continued rising, while the euro edged lower.
Despite eurozone inflation reaching the ECB’s 2% target, policymakers paused rate cuts in July, citing geopolitical risks as a key concern. The EU’s trade relationship with the U.S. — its largest trading partner — remains under pressure as negotiations continue, with potential tariffs of up to 30% on EU goods. The base-case scenario now assumes a 15% tariff on EU goods as EU diplomats remain sceptical about achieving a breakthrough before the deadline.
EUR/USD remained relatively flat during Asian and early European trading sessions. Today’s release of the U.S. Durable Goods Orders report at 12:30 p.m. UTC may bring volatility to EUR/USD. A stronger-than-expected reading could strengthen the US dollar, pushing the euro lower. Weaker figures may support bullish momentum in EUR/USD as traders assess the U.S. economic outlook ahead of the Fed’s next policy decisions. Key levels to watch for EUR/USD are support at 1.07200 and resistance at 1.08000.
Bitcoin (BTC) was trading sideways near $119,000 after hitting an all-time high, supported by positive news in the digital asset market. Approval of new cryptocurrency exchange-traded funds (ETFs) and announcements from major firms regarding expansion plans have benefited the crypto market. However, during Asian and European trading sessions, Bitcoin traded below a significant resistance level of $119,000.
Bitcoin began its potential pullback on Thursday. Over the past three months, Ethereum has more than doubled, while XRP has risen by 38%, both outpacing Bitcoin’s rise. However, without further Bitcoin gains, altcoins — -which had previously driven the market higher — -faced selling pressure.
The U.S. Securities and Exchange Commission approved converting of the Bitwise cryptocurrency index fund into an ETF. However, it almost immediately suspended the process to conduct additional verification. This action suggests regulators remain cautious about approving ETFs backed by XRP or lesser-known digital assets.
Meanwhile, investors turned their attention to Bitcoin’s possible growth after the Japanese AI company Quantum Solutions announced it. The company reported plans to buy 3,000 BTC, citing the recent trade deal between the U.S. and Japan. The key levels to watch for the BTC/USD pair are support at $107,000 and resistance at $119,000.
