While gold closed last week with weekly gain despite better than expected US growth data released on Friday and remained firm after it recovered from four month low following weak data from Germany and Asia, yellow metal started the week edging down. Since large increase in inventories and a smaller trade deficit contributing the most to US Q1 growth increased concerns over sustainability of such growth performance, dollar index remained hovering around 98. In the meantime, next round of trade talks between the US and China will start in Beijing this week. US Treasury Secretary Steven Mnuchin said sides were coming closer to a deal while adding they were in the phase of ending the talks with or without deal. Børge Brende, the President of World Economic Forum, said a trade deal was in favor of everyone’s interest while added sides needed to be flexible in negotiations.
Although US economy showed better than expected performance by growing 3.2% in the first quarter, it caused concerns over the health of the economy since the growth was supported by a smaller trade deficit and increasing inventories. Thus, gold prices kept firm last week and reached its weekly gain however yellow metal started the week edging down on Monday.
As of 14:06 GMT+3, spot gold was trading at $1,280.76 while dollar index was up to 98.02. US 10-year Treasury yield edged up to 2.509.
While core personal consumption expenditures, which is followed closely by Federal Reserve, decreasing to 1.3% from 1.8% increased expectations that Fed could cut rates despite strong US growth data, OANDA senior market analyst Edward Moya said in a note that Fed would likely wait until summer to signal a rate cut but added Fed could prepare for a rate cut at the end of this year, in case of increasing concerns due to weak inflation.
In the meantime, next round of trade talks between the US and China will start in Beijing this week. While it was stated that sides were eager to reach a trade deal despite long-standing dispute on significant issues, it was claimed US President Donald Trump could leave the table if he did not like the progress in negotiations. As two sides will work on solving the issues such as intellectual property rights and forced technology transfer in this round of talks which will start on Tuesday, Chinese leader Xi Jinping underlined planned economic reforms in his speech on Friday and stated there would be new legislations regarding protection of intellectual property rights and opening Chinese market to foreign investment.
US Treasury Secretary Steven Mnuchin said in an interview that sides were coming closer to a trade deal and there were major progress since two sides were eager to reach a deal. Mnuchin also said they were in the phase that either a deal will be done or sides will conclude the trade talks without a deal while making no comment whether the talks would end up with a deal before June.
Børge Brende, the President of World Economic Forum, said he was hopeful for a breakthrough as two sides were coming closer to a deal while adding two largest economies of the world solving their trade disputes would be in favor of the world economy and underlined sides had to show flexibility in the negotiations.