Gold starts the week weakening further since safe-haven appeal fades away due to increasing risk sentiment following better than expected March exports data in China and robust start of US earnings season. Following IMF and World Bank spring meetings last week, it is stated that the global economy is expected to rebound next year however there are limited policy options that central banks and fiscal authorities can follow to support this rebound, in the joint statement of IMF’s steering committee. It is also said in the statement that trade disputes have increased the risks over global economy and uncertainty will increase if current slowdown in the developed countries continues to weaken further. In the meantime, US Treasury Secretary Steven Mnuchin said on Saturday that the US and China are getting close to the final round of trade talks while added the possible trade deal that is being negotiated on will cover many issues that have never been negotiated before.
Gold prices remained weak and fell to one-week low on Monday due to increasing risk sentiment following Chinese trade data showing better than expected increase in exports in March as well as positive start to US earnings season and increasing optimism over trade talks.
As of 12:40 GMT+3, spot gold was trading at $1,286.84 an ounce while dollar index was down to 96.83. US 10-year Treasury yield was at 2.558.
Following IMF and World Bank spring meetings, it was stated in the joint communique of IMF’s steering committee that the global economy was expected to rebound from the weakness next year however there were limited policy options that could be used by central banks and fiscal authorities to support this rebound. While IMF stated that this expected rebound would be in risk if weakness in developed countries like the US, Japan and the Eurozone continued to weaken further, committee’s chairman Lesetja Kganyago said trade disputes, geopolitical risks, and political uncertainty were among those risks.
While the trade war between the US and China was the most important issue in the meetings, it was stated that the trade dispute was the main driver of current economic slowdown in the world economy. IMF President Christine Lagarde said if entire goods traded between the US and China were to be imposed tariffs, this would risk 0.8% of global growth, while Japanese Finance Minister Taro Aso underlined falling private investments, disrupted global supply chain and weakening productivity growth due to trade disputes around the world.
In the meantime, US Treasury Secretary Steven Mnuchin said on Saturday that possible trade deal between the US and China would go way beyond earlier efforts to open Chinese market to US companies and added two countries were close to the final round of trade talks. Mnuchin said there would be two calls with Chinese authorities this week and the trade deal that they had been working on included many details and covered wide range of issues that had never been negotiated before.