Gold prices remain weak while dollar index inched up from its one-week low and investors await progress in trade talks between the US and China. While it is stated that trade talks resumed on Wednesday are going very well, the US allows China till 2025 to fulfill its trade pledges including buying significant amount of US commodities and allowing American companies to have full ownership of their enterprises in China, according to Bloomberg. As two sides are working on final points of possible trade deal aiming that the US President Donald Trump and Chinese leader Xi Jinping could finally meet and agree on the final deal, Chinese vice premier Liu He will meet President Trump on Thursday. In the meantime according to data released in Europe today, Germany’s retail sales dropped sharply in February while a group of German economic research institutes announced that they cut their growth forecast for Germany in 2019.
Gold prices decreased on Thursday due to stronger dollar which recovered from one-week low it hit earlier this week while investors are looking for signs of progress in trade talks between the US and China.
As of 16:00 GMT+3, spot gold was trading at $1,284.68 while dollar index inched up from recent lows to 97.25. US 10-year Treasury yield was down to 2.519.
While resumed trade talks continue in Washington today, possible trade deal between the US and China would allow China till 2025 to fulfill its pledges of importing significant amount of commodities as well as allowing US companies to have full ownership of their enterprises in China, according to Bloomberg.
According to proposed agreement, China is expected to buy commodities such as soybeans and energy products while US also demands American companies to be allowed to have full ownership of their enterprises in China, which otherwise, according to claims, would trigger US retaliation. Moreover, in terms of narrowing trade imbalance, which was $419.2 billion in 2018, American side is pushing hard for China to buy huge amount of US commodities especially in the first two years after the deal is done, so that President Trump would be advantaged ahead of re-election in 2020.
While two sides are working hard to agree on final points so that Trump and Xi could finally meet and sign the deal, Chinese vice premier Liu He is expected to meet Donald Trump later today.
In the meantime, as weakness in manufacturing sector in Germany remains, retail sales, which was expected to rise, dropped sharply by 4.2% in February. Manufacturing sector is expected to remain weak in coming months in Germany, which is hit hard by global slowdown and weak foreign demand. Besides, a group of German economic research institutes announced today that they lowered their 2019 growth expectations to 0.8% from 1.9%. In a joint statement, they said “political risks have further clouded the global economic environment,” and warned growth could be even lower than expectations in case of no-deal Brexit.