July 25 (Reuters) - Gold prices fell on Friday, pressured by a recovery in the U.S. dollar and optimism over progress in trade talks between the United States and the European Union.
Spot gold was down 0.7% at $3,343.0 per ounce by 1150 GMT. U.S. gold futures fell 0.9% to $3,344.50.
The U.S. dollar index (.DXY), rebounded from its lowest in more than two weeks, making bullion more expensive for overseas buyers, while benchmark 10-year U.S. Treasury yields rose.
A resurgence in risk appetite driven by optimism over potential tariff negotiations, and lower-than-expected U.S. jobless claims reinforcing the view that the Federal Reserve is unlikely to cut rates, are pressuring gold, said Ricardo Evangelista, senior analyst at brokerage firm ActivTrades.
The European Commission said on Thursday that a negotiated trade solution with the U.S. is within reach - while EU members voted to approve counter-tariffs on 93 billion euros ($109 billion) of U.S. goods in case the talks collapse.
Data showed the number of Americans filing new applications for jobless benefits fell to a three-month low last week, indicating stable labour market conditions.
President Donald Trump pressed Fed Chair Jerome Powell to lower interest rates in a tense visit to the U.S. central bank on Thursday.
Markets are pricing in a potential rate cut in September.
Gold typically performs well in times of uncertainty and in low-interest-rate environments.
"Central bank buying can continue to hold the floor for gold, but a reignition of ETF inflows is needed for prices to break out higher once again towards our bullish year-end target of $3,675/oz, which likely also requires Fed cuts exceeding market expectations," analysts at JP Morgan said in a note.
Spot silver fell 0.9% to $38.74 per ounce, but was still on track for a weekly gain of about 1.6%. Platinum was 1.7% lower at $1,384.95, with palladium also down 1.8% at $1,201.75, its lowest in over a week.
Reporting by Anmol Choubey in Bengaluru, additional reporting by Ishaan Arora; Editing by Rachna Uppal, Kirsten Donovan
