As trade tensions slightly cooled down with sides’ more accommodative rhetoric on Thursday which increased risk sentiment, gold kept steady on Friday but eyes for weekly and monthly gain. US President Donald Trump said there were trade discussions with China on Thursday while China announced sides were considering further talks in September. Following this, gold prices pulled back and yellow metal was further pressured by stronger dollar. In the meantime, data released today pointed out mixed signals in Japan while retail sales in Germany fell in July. In the US; consumer spending continued to support the economy.
Gold prices fell due to cooling trade tensions and were trading in a range on Friday as the precious metal eyes for weekly and monthly gain.
As of 19:01 GMT+3, spot gold was trading at $1,527.52 an ounce while dollar index increased to 98.83. US 10-year Treasury yield remained weak at 1.516.
Saxo Bank commodity analyst Ole Hansen said on Reuters that toning down the rhetoric regarding trade tensions increased risk sentiment and caused a recovery in equity markets which motivated investors to go for profit taking in gold. However, Hansen added, economic slowdown remained and it would not change overnight while lower bond yields still supported yellow metal.
Escalation in trade tensions due to mutual moves to increase tariffs last week somewhat cooled down due to statements from both sides. US President Donald Trump said there were discussions with China on Thursday and further talks scheduled while China Commerce Department stated sides were considering further talks in September.
In the meantime, data released today indicated recovery in Japan’s industrial production while retail sales fell beyond expectations. Industrial production increased 1.3% in July after 3.3% decline in June however this is not expected to sustain. As a reflection of weak consumer sentiment, retail sales fell beyond expectations by 2%..
In Germany, where the economy has been losing its steam due to slowing global economy and trade war, retail sales fell by 2.2% in July which was beyond expectations. German economy is expected to weaken further following its contraction in the Q2.
In the US, data showed strong consumer spending continued to support the economy. Consumer spending increased above expectations in July by 0.6% while 12-month PCE price index increased to 1.4% from 1.3%. Data indicates there has been no sudden fall despite slowing economy.