While trade tensions between the US and China remains high, gold prices steady on Monday while strengthening dollar, due to robust US data and and 15-year high consumer confidence, pressures yellow metal on Monday. Some American companies including Google suspended their business relations with Huawei after US blacklisted the Chinese tech company and prevented it from accessing American technology. In the meantime, it is announced that US and Japan will start trade talks this week with expectations to come to a conclusion ahead of the summit between two leaders scheduled for late May.
Gold prices steady on Monday while dollar index rose to its two-week high following US robust data and 15-year high consumer confidence.
As of 15:35 GMT+3, spot gold was trading at $1.276,57 an ounce while dollar index was at 97.90. US 10-year Treasury yield edged down to 2.391.
CMC Markets chief market strategist Michael McCarthy said on Reuters that gold’s appeal was down due to safe haven demand for US dollar while adding gold could be pressured further in case of fading safe haven demand, given that yellow metal was already below $1.290.
While trade tensions between the US and China escalated after US imposed sanctions on Chinese tech company Huawei and US Department of Commerce blacklisted/banned company from having access to US technology, it was announced that Google suspended its business relations with Huawei regarding software, hardware and technical support services. Current Huawei users will still have access to products and services provided by Google however new versions of Huawei’s smartphones will no longer have access to any Google services except its open source version of Android operating system. Thus, it is expected to hit Huawei’s smartphone business since it will have no access to updates provided by Google operating system and Google products. Moreover, according to Bloomberg, chip producers Intel Corp, Qualcomm Inc, Xilinx Inc and Broadcom Inc are claimed to suspend their software and equipment supply to Huawei until further notice.
In the meantime, it was announced that trade talks between the US and China will start this week. US Trade Representative Robert Lighthizer will visit Japan on May 24 and meet Japan’s Economy Minister Toshimitsu Motegi as US side will look for a quick conclusion and a deal ahead of scheduled summit between two countries’ leaders at the end of May. On Monday, it was stated that US President Donald Trump postponed imposing tariffs on car and car parts for six months to give enough time for trade talks with European Union and Japan.