Gold is steady on Wednesday and not affected by weakening dollar since risk sentiment rises due to increasing optimism on trade talks between the US and China. According to Financial Times, American and Chinese officials have resolved most of conflicting issues preventing two sides from reaching a trade deal and they are now negotiating on how to implement and enforce the agreement. White House Larry Kudlow said he expects “additional headway” in trade talks which will start later on Wednesday. In the meantime in the UK, Prime Minister Theresa May stated that she will request another extension to the departure date to find a common ground with Labour Party on Brexit deal.
Gold prices recovered from one-month low as dollar index decreased however this edging up was limited by increasing risk sentiment due to trade optimism between the US and China, so gold is steady so far on Wednesday.
AS of 15:17 GMT+3, spot gold was trading at $1,293.44 an ounce while dollar index was lower to 97.03. U.S. 10-year Treasury yield was higher to 2.515.
Trade talks which took place in Beijing last week will resume in Washington on Wednesday. It was already stated that talks were going very well but according to Financial Times, American and Chinese officials have resolved most of their long-standing disagreements. While it was underlined that a final deal could be signed soon, two sides were claimed to still have disagreements on two issues: whether US tariffs on Chinese goods will be lifted and how US enforcement mechanism will work to make sure China complies with the deal. Executive vice president for international affairs at the US Chamber of Commerce Myron Brilliant said on Tuesday that 90% of the deal was completed but added the remaining 10% covered the most conflicting issues and underlined two sides would need to make concessions to reach a possible trade deal. The White House Economic Adviser Larry Kudlow said he expected “additional headway” in trade talks this week.
Possible trade deal is expected to include narrowing bilateral trade deficit, opening Chinese market to foreign competition and more importantly stopping forced transfer of technology from US companies as well as protection of intellectual property rights however it is still unclear how Chinese side will respond to these demands. China demands current tariffs on Chinese goods to be lifted while US officials want to keep tariffs to check whether China complies with the trade deal. It is stated that this disagreement could be solved by the U.S. lifting tariffs gradually on conditions based on China complying with the deal part by part.
In the meantime in the UK, while Brexit’s fate is still unclear, Prime Minister Theresa May stated she would request another extension from the EU. She said she looked for short-term extension and did not want the UK to take part in EU Parliament elections in May 23-26 while adding she would negotiate with Labour Party’s leader Jeremy Corbyn to find a common ground on relations with the EU after departure. If negotiations don’t go well and the EU rejects another extension, the UK will leave the EU without a deal on April 12.