While gold prices declined amid increasing risk sentiment in Europe and the US after it saw $1,286 an ounce on Tuesday, yellow metal was supported by weakening dollar due to the Eurozone growing better than expected in the first quarter. As next round of trade talks between the US and China starts this week, US Treasury Secretary Steven Mnuchin said on Tuesday that he hoped for substantial progress in the talks. White House chief of staff Mick Mulvaney said the talks would come to an end in one way or another in the next weeks. In the meantime, US President Donald Trump kept criticizing Fed while Fed is not expected to make any changes in interest rates after two-day meeting ending today, however comments on recent economic data will be under spotlight.
Following its increase due to growth worries caused by recent weak data from Chinese economy, gold prices declined on Wednesday after risk sentiment increased in Europe and the US on Tuesday, however, yellow metal finds support from weakening dollar.
As of 15:18 GMT+3, spot gold was trading at $1,281.16 an ounce while dollar index was down to 97.42. US 10-year Treasury yield was at 2.504.
While next round of trade talks starts this week, US Treasury Secretary Steven Mnuchin said on Tuesday in Beijing that he hoped for substantial progress in the talks. It was stated that sides had some progress on solving issues regarding protection of intellectual property rights and technology transfer, however, according to claims, there are still disagreements on how to implement the terms of a possible deal and whether mutual tariffs would be lifted. A Chinese official said on Reuters that there must be guarantees for implementations and underlined the importance of lowering the possibility of stepping back from promises.
White House chief of staff Mick Mulvaney said negotiations would end one way or another in couple of weeks. Mulvaney said less than a great deal would not be approved by the US and added sides were having dispute not only about the tariffs but also about what sort of mechanism should be created to control whether sides comply with their promises.
In the meantime, US President Donald Trump kept criticizing Fed policies on Twitter and said Fed lifted interest rates and instituted quantitative tightening even though inflation was very low. While underlining Chinese stimulus, he said American economy would “go up like a rocket” if there was a rate cut around one full point and some quantitative easing.
Federal Reserve’s two-day meeting will end later today. While Fed is not expected to change interest rates, Fed Chair Jerome Powell’s comments on US’s recent strong economic performance and reasons of low inflation will be under spotlight.
Nitixis chief economist Joseph LaVorgnia said on CNBC that Fed would not be too dovish since equities were performing record high and added strong dollar and low inflation would not allow Fed to be hawkish either.