Gold keeps trading in a narrow range amid mixed signals from the global economy, with improving industrial production and retail sales from China despite weak growth alongside with better than expected employment and inflation data from the US while weakness in Eurozone economy persists. US Treasury Secretary Steven Mnuchin said yesterday that US and Chinese officials would continue having phone talks this week while stating US officials could visit Pekin in case of progress in negotiations. According to data released today, Germany ZEW economic sentiment was disappointing in July while expectations increased that European Central Bank would cut the rates next week. Besides, data showed retail sales and manufacturing output grew above expectations in June in the US while industrial production did not change.
While the global economy sends mixed signals, gold prices continued to keep tight and trade in a narrow range even though yellow metal was down due to instant reaction following better than expected retail sales data in the US.
As of 17:39 GMT+3, spot gold was trading at $1,411.21 an ounce while dollar index increased to 97.33. US 10-year Treasury yield was also up to 2.124.
While uncertainty around trade relations between the US and China persists, US Treasury Secretary Steven Mnuchin said sides would continue phone talks this week and added US officials could visit Pekin in case of progress in the talks. US President Donald Trump stated on Monday that imposed tariffs had a major impact on Chinese economy and China would want to have a deal. This will be the second phone call between the US and China after sides agreed on a trade truce at G20 summit last month.
There are mixed signals over the health of the global economy as strong employment and inflation data from the US alongside with better-than-expected retail sales and industrial production from China showed the global economy might not be slowing as quickly as anticipated, however weakness in Eurozone persists.
Data showed today in Germany that ZEW economic sentiment was disappointing in July, weakening further to -24.5 from 21.1 while market expectations increased that European Central Bank would cut the rates by 10 basis point next week. ZEW President Achim Wambach said weak orders hurt future expectations while stating US-China trade dispute and Brexit issue had been weighing on export-driven German economy. On the other hand, ZEW Eurozone economic sentiment also decreased from -20.2 to 20.3 while trade data showed trade surplus with the US increased and trade deficit with China deepened in the first five months of the year.
In the meantime, data showed today in the US that retail sales was above expectations in June, increased by 0.4% like it did in May. Capacity utilization decreased to 77.9 from 78.1 while industrial production did not change. Manufacturing output growth was above expectations and increased to 0.4% from 0.2%. There were instant reaction to better than expected retail sales and gold prices decreased but this seems to be limited for now.