While dollar weakens further, gold keeps its recent gains above $1,300 as yellow metal is supported by increasing worries over global economy due to IMF downgrading its growth forecast in its report published yesterday and the US President Donald Trump saying on Tuesday that there will be new tariffs on EU products. While Brexit uncertainty is yet to be solved, a longer extension to departure date is expected to be approved in the EU leaders summit today. In the meantime, European Central Bank officials will be meeting today. While ECB is expected to keep its dovish stance, possible details on new refinancing program will be under spotlight. Besides, Federal Reserve’s March meeting minutes will be published today, while investors will focus on whether there was a discussion over possible rate cut.
While global growth worries increased over IMF downgrading its global growth forecasts due to trade conflicts as well as Brexit uncertainty and Donald Trump showing his intention to impose new tariffs on EU products, gold prices kept its recent gains.
As of 13:46 GMT+3, spot gold was trading at $1,303.80 while dollar index was at 96.96. US 10 year Treasury yield edged up to 2.502.
As uncertainty around Brexit still goes on, a longer extension to Brexit is expected to be approved in the EU leaders summit today while British Prime Minister Theresa May had already asked for an extension to June 30. She had a meeting with German Chancellor Angela Merkel and France President Emmanuel Macron yesterday to ask for support and Merkel said it was possible to extend Brexit until the end of the year or early 2020 while Macron said he was not in favor of a long extension.
Donald Tusk, President of the EU Council, said that EU leaders should consider a flexible extension up to one year, possibly sooner in case British parliament approved the deal. Tusk said an extension to June 30 would risk a series of new extensions, adding that there was little reason to believe that Brexit deal would be approved by British parliament till June 30. He also said there would be no need for EU leaders to come to a summit each time to approve another extension in case his proposal for flexible extension was taken into consideration.
In the meantime, ECB officials will meet later today. ECB is expected to keep its dovish stance after its U-turn in March meeting and postponing interest rate hikes until 2020, possible details of its new refinancing problem will be under spotlight. Besides, ECB President Mario Draghi’s comments on Eurozone economy, especially Germany, will be carefully watched. In its report yesterday, IMF downgraded its Eurozone growth forecast for this year from 1.6% to 1.3%.