Trade Breakthrough Pressures Gold Prices Further

Market Overview

U.S. equities extended their rally for a second consecutive day, driven by the breakthrough in U.K.-U.S. trade negotiations and bullish remarks from former President Donald Trump. The upbeat sentiment across the stock market triggered a rotation out of safe-haven assets like precious metals. The U.S. Dollar Index surged more than 1% intraday, reaching a four-week high, placing downward pressure on gold for a second straight session, with gold futures falling over 2% during the day.

U.S. Treasury yields spiked, with the 10-year yield climbing more than 10 basis points amid a sharp bond sell-off. Meanwhile, although the Bank of England struck a dovish tone, it refrained from aggressive rate cuts, prompting a rise in U.K. 2-year gilt yields. In the energy space, geopolitical tensions remained elevated, and crude oil prices rebounded sharply as the U.S. imposed stricter sanctions on Iranian oil exports, pushing WTI crude up more than 3%.

Hot Topics to Watch

● U.K.-U.S. Tariff Deal

The United States will maintain a 10% base tariff, but British car exports to the U.S. will see their tariffs slashed from 27.5% to 10%. Steel and aluminum duties will be cut from 25% to zero. The tariff relief will apply to up to 100,000 U.K. vehicles—nearly the entire volume exported to the U.S. last year. Both sides also reached a reciprocal market access agreement for beef, with U.K. farmers securing a duty-free quota of 13,000 tons. Importantly, the U.K. government reaffirmed its commitment to maintain food safety standards. In a further concession, the U.K. will eliminate tariffs on U.S. ethanol used in beer production.

Key Events to Watch

• 18:45 GMT+8 – U.S. Federal Reserve Governor Kugler speaks on maximizing employment

• 20:30 GMT+8 – U.S. New York Fed President and permanent FOMC voter John Williams delivers keynote at the 2025 Reykjavik Economic Forum; Richmond Fed President Thomas Barkin (FOMC voter) joins a fireside chat