Europe, the United States are expected to reach the "largest" trade deal, and gold prices may target the 3,300 mark next week, focusing on the Federal Reserve's decision

Gold prices fell on Friday on the back of a stronger dollar, which rallied from its lowest level in more than two weeks and signs of progress in US-EU trade talks hit safe haven demand. Spot gold fell 0.9 per cent to $3,336.01 an ounce. US gold futures fell 1.1 per cent to settle at $3,335.60.

Peter Grant, vice-president and senior metals strategist at Zaner Metals, said: "The deal with Japan is significant, and the US and Europe are on track to reach an agreement by the August 1 deadline. This has weakened haven demand, and rising risk appetite has driven capital flows into risk assets."

The European Union's executive commission said a trade deal with the United States was just around the corner, but European Union members still approved the imposition of counter-tariffs on U.S. goods if negotiations failed.

US President Donald Trump said he would meet with the European Union on Sunday and "we will see if we make a deal with the European Union on Sunday." Mr. Trump said there was a 50 per cent chance of a deal with the European Union and that there could be 20 "sticking points" for a deal. If a deal is reached, the one with the European Union would be the largest deal, he said.

Fund managers raised bullish bets on gold to their highest level since April, ahead of progress in trade talks between the United States and the European Union. Net long positions by hedge funds and other big speculators rose 19 percent to 170,868 contracts in the week to July 22. That was the highest level in 16 weeks, according to data released by the U.S. government on Friday. The trade war launched by the Trump administration has pushed gold prices up 27 percent this year. While the easing of trade tensions will dent haven demand, gold has also been supported by strong central bank buying.

While U.S. President Donald Trump's import tariffs have led to signs of a pick-up in inflation, stable labor market data is expected to support the Federal Reserve in keeping interest rates unchanged at 4.25% -4.50% at next week's meeting.

Initial jobless claims fell 4,000 to 217,000 in the week ending July 19, the labour department said on Thursday, the sixth straight week of declines and the lowest level since mid-April.

Economists surveyed by The Wall Street Journal had expected new claims for unemployment benefits to rise by 6,000 to 227,000.

Trump made a surprise visit to the Federal Reserve on Thursday, renewing pressure on Federal Reserve Chairperson Jerome Powell to urge a sharp interest rate cut.

Trump said on the same day,Discussed interest rates with Federal Reserve Chairperson Jerome Powell, saying "the conversation was productive." Firing Powell was a major move, but it was not necessary, and Powell was not under pressure to resign. Trump said Powell's term is coming to an end and believes he will do the right thing. There are probably three potential candidates for the next Fed chairperson in mind. Trump said the United States should be the country with the lowest interest rates, and one thing has to happen, interest rates have to come down.

The Fed's influence has become too great and it should get back to basics, said Mr. Bescent, the US Treasury secretary, who said he wanted to see the central bank solve its problems internally.

Mr. Warsh, a former Fed governor, said he would support a rate cut next week if he voted. Asked if he wanted to become Fed chairperson, he said, "It would be a great honor if the president called." Mr. Warsh said there was no need for a new law, but a change of leadership at the Fed. He also said the market had to be shown that we were serious about cutting spending.

Nick Timiraos, the Fed's mouthpiece, wrote that Mr. Trump's rare visit to the Fed building on Thursday afternoon amounted to a political show designed to increase pressure on the central bank as part of an unconventional campaign to tarnish the public image of Fed chairperson Jerome Powell and push for interest rate cuts. For a president who has built his brand on real estate projects and reality TV, the visit provided a TV-appropriate moment to cast Powell, Trump's self-picked Fed chair eight years ago, as an inept bureaucrat presiding over a $2.50 billion renovation project with cost overruns.

Grant said,Gold could "attract some buying interest at the $3,300 level, but it may not hit a record high until the Federal Reserve makes a decision", adding that the meeting could signal a rate cut later this year.

The tug-of-war between Mr. Trump and Mr. Powell over interest rate cuts has cast a shadow over the upcoming Fed meeting, but markets could be in for a pleasant surprise, according to Andrzej Skiba of RBS. While Mr. Powell is expected to reassert the Fed's independence and stay put, he is also likely to extend an "olive branch" to open the door to a rate cut if inflation evolves as expected, Mr. Skiba said. One factor that could disrupt the path of rate cuts is an escalating trade war, which could heighten inflation fears. Otherwise, a cooling economy should allow the Fed to start cutting rates, Mr. Skiba said.

The geopolitical situation is also a factor in the decline in gold prices. On the 25th local time, senior Hamas official Tahir Nunu said that Hamas has an absolutely positive attitude towards the efforts of the relevant mediators, but was surprised by the US statement.

Mr. Nunu said the talks were going well and there was a huge consensus on a plan for Israeli troop withdrawal during the ceasefire period. The US statement was groundless, especially given the progress made in the negotiations, and the remarks made by the US side were surprising. Mr. Nunu said Hamas was ready to complete the negotiations and was serious about reaching an agreement to end the Gaza conflict. The parties were scheduled to discuss specifically the issue of the exchange of Palestinian and Israeli detainees next week, but Hamas was not informed of any problems with the document throughout the negotiations. Israel's recent negative statements are an attempt to evade the outcome of the negotiations.

On July 25 local time, Turkish Foreign Minister Feidan said that Turkey is coordinating the process of holding a summit of leaders of all parties involved in the conflict between Russia and Ukraine in Turkey. The two sides have previously reached an agreement in principle. Dan pointed out that he is optimistic about reaching a "transitional solution" in the future.

Next week, the gold price will focus on the US, Europe, and Sino-US trade negotiations. If the negotiations are optimistic, the gold price may continue to drop to the $3,300/ounce mark; in addition, focusing on the Federal Reserve resolution, after Trump's visit to the Federal Reserve headquarters, whether the Federal Reserve will maintain its independence will be highlighted in this resolution. Friday will also release non-agricultural data, which requires attention.