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EU to ramp up retaliation plans as US tariff deal

prospects dim

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Bessent says Fed needs to be examined as an institution

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Palladium up over 3%

(Updates for morning U.S. hours)

By Sherin Elizabeth Varghese and Ashitha Shivaprasad

July 21 (Reuters) - Gold prices gained over 1% on Monday

as the dollar and U.S. bond yields weakened amid uncertainty

over trade talks ahead of a U.S. deadline of August 1 for

countries to strike deals or face more tariffs.

Spot gold was up 1.2% at $3,390.79 per ounce at 9:52

ET (1352 GMT). U.S. gold futures were up 1.3% to

$3,402.40.

The U.S. dollar index was down 0.4%, making

dollar-denominated gold more affordable for buyers using other

currencies, while benchmark 10-year U.S. Treasury yields

hit a more than one-week low.

"With the August 1st deadline looming, it brings a level of

uncertainty to the market and that certainly is supportive,"

said David Meger, director of metals trading at High Ridge

Futures.

The European Union is exploring a broader set of possible

counter-measures against the U.S. as prospects for an acceptable

trade agreement with Washington fade, according to EU diplomats.

On the interest rate front, traders are pricing about a 63%

chance of a rate cut in September, according to the CME FedWatch

Tool.

U.S. Treasury Secretary Scott Bessent said the entire

Federal Reserve needed to be examined as an institution and

whether it had been successful.

Talk of earlier than expected U.S. rate cuts is building,

with speculation around a possible replacement of Fed Chair

Jerome Powell and reshaping of the Fed adding to market jitters,

Meger said.

Gold is considered a hedge against uncertainty and tends to

perform well in a low interest rate environment.

Data showed that the world's leading gold consumer, China,

brought in 63 metric tons of the precious metal last month, the

lowest amount since January. Its imports of platinum in June

fell 6.1% from the prior month.

Spot silver gained 1.8% to $38.86 per ounce, platinum

rose 2.2% to $1,453.17 and palladium was 3.5%

higher at $1,284.46.