The United States and the European Union reached a significant trade agreement on Monday (January 28, 2025). This development helps avert a trade war and boosts market sentiment, increasing risk appetite among investors.
As a result, the Nasdaq soared more than 100 index points, reaching a historic high of 23,555. In contrast, Gold, traditionally viewed as a safe haven asset, became less appealing as its price dropped nearly $13, or 130 pips, to approximately $3,324 per troy ounce upon market opening.
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Under the new agreement, the European Union will face a 15% import tariff starting August 1, which is a reduction from the previous 30%. The EU stands as the largest trading partner of the United States, and this trade deal significantly reduces the risk of a trade war that could potentially slow down the global economy.
This positive sentiment among market players is likely to lead to increased investments in high-yield assets such as stocks, propelling US stock indices to set new record highs, with the possibility of continued upward momentum. Conversely, Gold is expected to face further pressure.
