PRECIOUS-Gold subdued by risk-on mood after US-EU tariff deal; focus on Fed

By Brijesh Patel

July 28 (Reuters) - Gold prices steadied on Monday, with gains curbed by improved risk sentiment following a trade deal between the United States and the European Union, while investors looked forward to the U.S. Federal Reserve's policy meeting later this week.

Spot gold XAU= was flat at $3,335.87 per ounce as of 1035 GMT, after touching its lowest level since July 17 earlier in the day.

U.S. gold futures GCcv1 were unchanged at $3,335.30 per ounce.

Washington struck a framework trade agreement with the European Union in Scotland on Sunday, imposing a 15% import tariff on most EU goods - half the threatened rate - and averting a bigger trade war.

Risk appetite in the wider financial markets rose with European shares advancing to a four-month high, led by gains in auto and pharmaceutical stocks. .EU MKTS/GLOB

Meanwhile, talks between the U.S. and China are scheduled in Stockholm on Monday amid expectations of another 90-day extension to the trade war truce between the world's top two economies.

"There are two offsetting factors keeping gold in balance. The (U.S.-EU) trade deal weighs on demand for safe-haven assets," said UBS commodity analyst Giovanni Staunovo.

"At the same time the deal removes some inflation uncertainty for the Fed, eventually allowing the Fed to cut rates later this year, which normally is gold supportive."

The U.S. central bank is expected to maintain its benchmark interest rate in the 4.25% to 4.50% range after its two-day policy meeting concludes on Wednesday. Markets continue to price in a potential rate cut in September. FEDWATCH

U.S. President Donald Trump said on Friday he had a positive meeting with Fed Chair Jerome Powell, suggesting the Fed chief might be inclined to lower interest rates.

Gold tends to do well in a low-interest-rate environment.

Elsewhere, spot silver XAG= was unchanged at $38.12 per ounce, while platinum XPT= rose 0.2% at $1,404.72 and palladium XPD= gained 1.2% to $1,234.97.

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