Gold has started the new trading week with losses. In Monday’s North American trade, the spot price for one ounce of gold is $1289.63, down 0.22% on the day. It’s a very quiet day on the release front, with no key indicators on the schedule. The sole event is a speech from FOMC member Raphael Bostic. On Tuesday, the US releases Richmond Manufacturing Index.
After weeks of an escalating trade war between the US and China, there was a breakthrough of sorts on Sunday. Treasury Secretary Steven Mnuchin announced that the two sides had made significant progress and the trade war was being ‘put on hold’. This has resulted in stronger risk appetite and has pushed gold prices lower in the Monday session. Just last week, the White House sounded pessimistic about a deal being reached with China. The two economic giants had exchanged stiff tit-for-tat tariffs in recent weeks, raised fears of a bilateral trade war between the two largest economies in the world. The respite in the rhetoric and tariffs means that the two sides can now tackle the US trade deficit with China, which President Trump has long complained is a result of a non-level playing field with China. The news that the sides had backed down has pushed the dollar and stock markets higher.
It’s a quiet start to the week, with no major US data releases until Friday. In the meantime, markets will be keeping a close eye on the Federal Reserve, which will release the minutes of its policy meeting earlier in May. The Fed did not raise rates at the meeting, but a strong US economy has raised expectations that the Fed will press the rate trigger in June – according to the CME Group, the odds of a June increase stand at 95%. The markets will be looking for some guidance from the May minutes, and is the minutes are hawkish, traders can expect the dollar to post gains against its rivals.
