Gold prices increased on Friday but keep trading in a narrow range, after falling as low as $1,281 while dollar index increased due to strong data released yesterday showing unemployment insurance claims reached 50-year low in the US. US President Donald Trump said on Thursday that the US and China are so close to a trade deal which would be announced in four weeks. Chinese leader Xi Jinping said through Vice Premier Liu He that he hopes two sides to work with mutual respect and reach an agreement that serves both sides’ interests. In the meantime, Philadelphia Fed President Patrick Harker said strong job market and inflation close to the target will allow one interest rate hike at most this and next year.
Gold prices increase but keep trading in a narrow range on Friday, after it hit 2-1/2 month low at $1,281 yesterday due to increasing risk sentiment on signs of progress in trade talks and increasing dollar index on strong US data. Besides, March non-farm payroll employment increased by 196.000, exceeding expectations, according to data released on Friday.
As of 15:38 GMT+3, gold was trading at $1,288.77 an ounce while dollar index was at 97.28. US 10-year Treasury bill was higher at 2.531.
While both sides stated that trade talks between the US and China were going very well, US President Donald Trump said sides were so close to a trade deal which would be announced within four weeks. Ahead of his meeting with Liu He on Thursday, Trump said “some of the toughest things have been agreed to” and there were still some sticking points to discuss while he added getting close to making a deal did not mean the deal was done and he would meet President Xi if there was a deal. Trump did not give any signal whether tariffs would be lifted in case of a trade deal as he said remaining sticking points were tariffs and intellectual property rights.
Li Yishuang, an economist from China Securities Finance Co., said on Bloomberg that Trump was pressing China to get greater concessions on opening Chinese market to foreign competition and supervision of implementation of promises, and added these were implementation problems and the trade deal would likely be reached by the end of April.
China President Xi Jinping also commented on the progress and said through Liu He that, he hoped both US and Chinese officials to worked with mutual respect and equality to reach a trade deal that would serve both sides’ interests.
In the meantime Philadelphia Fed President Patrick Harker said a strong US job market and near-the-target inflation would allow one interest rate hike at most in 2019 and 2020. Harker expects unemployment to drop to 3.5% and inflation to hover around Fed’s 2% target. He also said there were still risks such as narrow spread between long and short term note yields and slowdown in foreign economies. Lastly, he said he did not expect any interest rate cut this or next year and underlined that this would mean a fundamental problem in the economy.