Gold Prices Fall Back Below $1.300

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Gold prices hit two-week high at $1,311 on Wednesday supported by Brexit uncertainty and weakening dollar. However, yellow metal fell back below $1,300 level as retreat of British pound after the voting last night helped dollar index to edge higher and weighed on gold prices. After the rejected Brexit deal, British parliament rejected no-deal Brexit this time and now today’s voting to extend Article 50 is under spotlight. In the meantime, U.S. President Donald Trump said on Wednesday that he is in no rush to reach a trade deal with China and insisted possible trade deal must include intellectual property rights protection. By the way, according to data released in China on Thursday, industrial production showed the worst performance of 17 years in the first two months of 2019.

Gold prices increased after Brexit deal was rejected and hit two-week high on Wednesday but later on retreated below $1,300 as falling back British pound caused dollar index to edge higher.

As of 14:31 GMT+3, spot gold was trading at $1,297.58 while dollar index was higher at 96.81. U.S. 10-year Treasury yield rose a little to 2.630.

In the UK, British parliament rejected no-deal Brexit on Wednesday after Prime Minister Theresa May’s Brexit deal was again rejected for the second time on Tuesday despite the last minute changes in conflicting Irish backstop clause. Moreover, there will be another voting to extend Article 50, which states the UK will leave the EU on 29th of March. If that passes through parliament, PM Theresa May is expected to make a request for one-time extension of Article 50 to 30th of June unless her Brexit deal fails to pass the parliament till 20th of March. EU leaders already stated an extension would require a justification, however since countries like Germany and Ireland are open to a possible extension of the departure date, this is highly likely to happen.

In the meantime, U.S. President Donald Trump said he is not in rush to reach a trade deal with China and insisted a possible trade deal must include structural changes like protection of intellectual property rights. He was also asked about possible meeting with Chinese leader Xi Jinping. “We could do it either way. We could have the deal completed and come and sign, or we could get the deal almost completed and negotiate some of the final points. I would prefer that,” said Trump, who already stated recently that there will not be a final deal until he meets Chinese leader Xi Jinping. Possible Trump – Xi meeting, which is expected to happen later this month, is still yet to be scheduled.

By the way, according to the data released in China today, industrial production increased %5.3 in the first two months of 2019, showing the worst performance since 2002. Chinese economic outlook, which was hit by trade war and global economic slowdown, is said to look downbeat while retail sales increased %8.2 in January-February but still hovering around 15-year low. As unemployment rate increased to %5.3, monetary stimulus is expected to continue in the coming months beside fiscal stimulus program followed by Chinese government to support slowing economy.