PRECIOUS-Gold falls to near 3-week low as US-EU deal boosts risk appetite ahead of Fed meeting

By Sherin Elizabeth Varghese

July 28 (Reuters) - Gold fell to a near three-week low on Monday as a U.S.-European Union trade accord lifted the dollar and risk sentiment, while investors awaited fresh cues on rate policy from this week's Federal Reserve meeting.

Spot gold XAU= fell 0.8% to $3,310.45 per ounce as of 01:49 p.m. ET (1749 GMT), after touching its lowest level since July 9, at $3301.29, earlier in the session.

U.S. gold futures GCcv1 settled 0.7% lower at $3,311.2 per ounce.

The U.S. dollar index .DXY rose to a more-than-one-week high, making bullion more expensive for overseas buyers. USD/

"I think the more trade announcements we get, the more the dollar increases. These tariff deals are dollar-friendly, lowering the allure of gold and driving the sell-off amid a risk-on sentiment," said Marex analyst Edward Meir. .N MKTS/GLOB

A weekend deal between U.S. President Donald Trump and the European Commission imposed a 15% tariff on EU goods, half the rate initially threatened, easing fears of a broader trade war.

That pact came on the heels of last week's U.S.-Japan agreement, while U.S. and Chinese officials will resume tariff talks in Stockholm on Tuesday, aiming to extend their trade truce by another 90 days.

However, a U.S. trade representative said no major breakthrough was expected with China, noting discussions would focus on monitoring and implementing existing commitments.

"You're not seeing a huge move on the downside in gold because the deals could still prove to be either difficult to implement or unrealistic," said Meir.

The U.S. Federal Reserve is expected to keep its benchmark rate in the 4.25%–4.50% range when its two-day meeting concludes on Wednesday.

Markets, meanwhile, continue to price in a potential September rate reduction. FEDWATCH

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

Elsewhere, spot silver XAG= was down 0.3% at $38.04 per ounce and platinum XPT= fell 1.1% to $1,386.03, while palladium XPD= gained 1.5% to $1,238.18.