As global growth concerns increased with persisting trade tensions, gold prices jumped following weak US employment data released on Friday. US President Donald Trump said he would consider whether to impose tariffs on Chinese imports worth at least $300 billion after G20 summit at the end of June in Japan. Besides, as talks between the US and Mexico continue, Bloomberg claimed that US side was considering postponing planned tariffs on Mexican goods which would take effect on Monday. According to data released today, Germany’s industrial production as well as exports and imports sharply fell in April as European Central Bank stated its concerns over the health of Eurozone economy yesterday.
While US trade dispute with China, and Mexico lately, increased worries on global economic growth, gold prices jumped following weak US employment data. The US economy added 75,000 non-farm jobs in May, which is considered disappointing since it is well below expectations of 175,000 but unemployment was stable at 3.6%.
As of 15:57 GMT+3, spot gold was trading at $1,341.30 an ounce while dollar index fell to 96.62. US 10-year Treasury yield was also down to 2.062.
ING analyst Warren Patterson said on Reuters that gold’s upside movement was strong earlier in this week but added that prices were approaching to the level where it would struggle to go higher. Patterson added sentiment was supportive for gold due to trade disputes and expectations that Fed would cut the rates.
As uncertainty increased due to deteriorating US-Sino trade relations, US President Donald Trump said on Thursday that he would consider whether to impose tariffs on remaining Chinese goods worth $300 billion after his meetings with world leaders at G20 summit which would be held at the end of June in Japan. Trump said earlier that he could impose tariffs on Chinese goods worth at least $300 billion and he would do it at the right time while Chinese Commerce Ministry stated that China would take counter-measures if the US wanted to escalate trade tensions between two countries. Trump also said he would be meeting Chinese leader Xi Jinping at G20 summit but official announcement is yet to be made.
Since last Wednesday, talks between the US and Mexico continue with not enough progress but Bloomberg claimed that US side was considering postponing 5% tariffs on Mexican goods planned to take effect on Monday to give more time for sides to reach an agreement. Trump said unexpectedly last week that he would impose 5% tariffs on Mexican goods unless Mexican government took necessary precautions to stop illegal immigration.
According to data released today, Germany’s industrial production sharply declined by 1.9% in April as European Central Bank underlined yesterday that uncertainty due to geopolitical developments, rising trade protectionism and vulnerability in developing economies had been weighing on economic sentiment. As industrial production shows the weakest performance since August 2015, ING’s Carsten Brzeski said in a note that German economy had a disappointing start in the second quarter while adding the economy would need domestic demand much more than before. Moreover, German economy suffers from lack of demand not only domestically but also internationally since another data showed today that exports declined by 3.7% alongside with 1.3% decrease in imports in April.