Weakness in Gold Prices Remains

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Weakness in gold prices remains after declining with better-than-expected US growth data and cautious statements over trade talks between US and China last week. While strong dollar keeps pressuring the prices, US President Donald Trump kept criticizing Fed Chair Jerome Powell in his speech on Saturday and said the U.S. dollar is too strong. In the meanwhile, according to Bloomberg US and China are close to a trade deal that includes lifting the tariffs on China goods mostly or completely as long as China side keeps their promises on matters from protecting intellectual property rights to buying significant amount of American goods.

Gold prices had weekly loss last week and declined below $1.300 level after losing value with strengthening dollar due to better-than-expected US growth. On Monday, it is seen that the weakness in gold prices remains.

As of 14:13 GMT+3, spot gold was trading at $1,287.46 while dollar index increased to 96.58. U.S. 10-year Treasury yield inched down to 2.744.

U.S President Donald Trump continued his criticism over Fed Chair Jerome Powell in this speech on Saturday and referred him as “a gentleman that likes increasing interest rates” while saying he does not like too strong dollar that ruins the competitiveness of American economy worldwide. The U.S. economy is doing well despite the actions of the central bank, Trump said while stating that the dollar would have been a little bit lower if they had left interest rates where they were, especially in an environment where inflation is low. Trump said the U.S. economy is doing great while the other countries are performing very poorly and this makes it harder for U.S. economy to be successful. Fed Chair Powell said in his speeches last week that the “patient” approach in the monetary policy would remain as they watch the economic data inflow. Fed, which kept interest rates on hold in January meeting, is not expected to change interest rates in the next meeting later this month.

According to Bloomberg, in the meanwhile, U.S. and China are close to a trade deal that includes lifting tariffs imposed on Chinese goods mostly or completely if China side keeps their promises on important matters from protecting intellectual property rights to buying significant amount of American goods. To reach a deal, tariffs on $200 billions Chinese good should be lifted, China side said last week. However, it is still uncertain whether tariffs imposed on Chinese goods will be lifted gradually or completely at once. It is claimed that U.S side will use tariffs as a threat to see if Chinese officials are meeting the demands of the possible trade deal and the tariffs will be lifted completely only when China fulfills all requirements. Trump prolonged the trade truce which was due March 1st referring the significant progress made in trade talks however he said there will be no final deal till he meets Chinese President Xi Jinping. It is still unclear when two presidents will meet however, according to some sources, this meeting will possibly happen at the end of March.