Gold falls on Monday after hitting the highest level since April 2018 and having weekly gain due to trade dispute and worries on global economic slowdown. While expectations on rate cut by Fed increased due to weak US employment data released recently, Fed will likely cut the rates in July, if not in the meeting this week, however, some economists think Fed may not be as dovish as expected since hard data do not signal any kind of sharper slowdown in US economy. In the meantime, as trade dispute between the US and China persists, US Commerce Secretary Wilbur Ross said there might not be a deal coming out from possible meeting between US President Donald Trump and China’s President Xi Jinping at G20 but two sides could agree on resuming trade talks. In addition to this, Reuters reported that US chipmakers lobbied to ease ban on Chinese tech company Huawei.
After hitting the highest level since April 2018 at $1,358 and having fourth consecutive weekly gain last week, gold prices fell on Monday.
As of 13:56 GMT+3, spot gold was trading at $1,333.45 an ounce while dollar index was at 97.53. US 10-year Treasury yield edged up to 2.115
Given recent weak data released in the US, expectations increased that Fed would go for a rate cut soon while central bank will highly likely cut the rates in July, if not this week. Despite rising expectations, Oxford Economics chief financial economist Kathy Bostjancic said Fed might not be as dovish as expected since hard data did not signal any sharper decline in US economic activity. Although expectations increased especially after weak employment data in May, Fed would likely step back to from being too dovish given May’s strong retail sales data released last Friday showing that the economy might not be slowing down as sharply as feared.
As trade dispute between the US and China persists, US Commerce Secretary Wilbur Ross said on Sunday that best possible outcome from possible meeting between US President Donald Trump and China’s President Xi Jinping at the end of the month at G20 in Japan would be a decision to continue trade talks while adding enforcement mechanism would not a subject to a meeting at this level.
In addition to this, Reuters reported that US chipmakers started lobbying to ease sales ban on Huawei. US announced earlier that the company was banned from having access to US-made equipments due to national security measures as a part of trade dispute with China and US chipmakers had not been selling their technological equipments to Huawei ever since. Reuters said US chipmakers requested from Commerce Department that the ban on at least chips used in smartphones and computers could be eased since they would not threaten national security while adding this was not to help Huawei but to prevent US companies from further harm.