Gold market faced significant selling pressure on Wednesday (July 23) following the announcement of a breakthrough trade agreement between the U.S. and Japan. Spot gold prices closed down 1.26% at $3,400.20 per ounce, erasing all gains from the previous three trading sessions. In contrast, silver demonstrated relative strength, briefly hitting a 12-year high of $39.91 per ounce before settling just 0.13% lower.
U.S. President Donald Trump announced a comprehensive trade agreement with Japan on the evening of July 22, reducing planned auto tariffs from 25% to 15% (previously set to take effect August 1). The deal also secured Japanese commitments, including a $550 billion investment fund for U.S. projects, the purchase of 100 Boeing aircraft, and expanded imports of American agricultural products.
This development eased market concerns over global trade tensions, diminishing gold’s appeal as a safe-haven asset.
Nikos Tzabouras, senior market analyst at Tradu.com, told Reuters: “Trade deals like this mitigate macroeconomic risks and could weaken safe-haven demand, leading to continued volatility in gold prices.”
Technically, gold broke below the 23% Fibonacci retracement level at $3,410, a key support zone drawn from the April 7 low of $3,000 to the all-time high above $3,500. The next critical support lies at $3,375, with a potential further drop to $3,331 (38% retracement) if selling pressure persists.
Despite the U.S. dollar index falling for a fourth consecutive session to 97.21, gold failed to capitalize on the weaker greenback. Analysts noted that a stronger euro (on hopes for a U.S.-EU trade deal) and disappointing U.S. existing home sales (hitting a nine-month low) contributed to gold’s decline.
While gold struggled, silver futures on COMEX rallied, nearing the $40 psychological barrier before settling at $39.50.
Alexander Zumpfe, a precious metals trader at Heraeus Metals Germany, said: “Silver’s rally is fueled by three factors—strong industrial demand, persistent supply deficits, and rising investor interest.”
Industry data suggests tightening conditions, with the London Bullion Market Association (LBMA) reporting elevated silver leasing rates, while ETF holdings continue to drain available supply. According to Bloomberg, nearly 500,000 ounces of silver recently shifted from London to U.S. warehouses amid tariff-related hedging, exacerbating regional shortages.
Despite short-term pressure, analysts remain bullish on gold’s long-term prospects. Tzabouras added: “U.S. debt concerns and de-dollarization trends should sustain central bank gold demand.” Year-to-date, gold is still up ~30%, while silver has surged 36%, outperforming most major assets.
Zumpfe highlighted that a gold rebound, renewed dollar weakness, or rising Asian premiums could propel silver past $40, with the 2011 peak near $42 as the next target.
As of 8:00 AM Beijing time (July 24), spot gold traded at $3,398.50, while silver held steady at $39.48. Traders are now focused on upcoming Eurozone PMI data and U.S. Q2 GDP figures, which may dictate near-term precious metals trends.
