Gold Drops After Washington and Tokyo Agreement

Gold witnessed a decline on Wednesday as risk appetite improved following U.S. President Donald Trump's announcement of a trade deal with Japan ahead of an imminent tariff deadline. However, a weak dollar and declining bond yields limited the losses.

Gold in spot transactions fell by 0.2% to $3,422.95 per ounce by 0459 GMT, after reaching its highest point since June 16 earlier in the session. Meanwhile, U.S. gold futures dropped by 0.2% to $3,436.10.

Trump stated that the U.S. and Japan had reached a trade agreement, including a 15% tariff on U.S. imports from Tokyo. U.S. Treasury Secretary Scott Biscent announced that American and Chinese officials would meet in Stockholm next week to discuss extending the deadline to August 12 for negotiating a trade deal.

Tim Waterer, a senior market analyst at C.M. Trade, mentioned that if more trade deals are signed before August 1, it could increase overall risk appetite and reduce demand for gold. However, he added that if the dollar remains under pressure, a return to the level of $3,500 per ounce could be a possible short-term outcome.

Japanese stocks led the rise in Asian stock markets on Wednesday following Trump's announcement of the agreement with Japan. The dollar index remained stable near its two-week low against major currencies, making dollar-priced gold less expensive for those holding other currencies.

The yield on the U.S. 10-year Treasury note touched its lowest level since July 9 on Tuesday. As for other precious metals, silver in spot transactions declined by 0.2% to $39.20 per ounce, platinum fell by 0.1% to $1,439.65, and palladium decreased by 0.2% to $1,272.50.